Family Matters: Having Everyone at the Table Makes Clients Confident

Time for a family meeting.

Having a written financial plan can boost clients’ confidence around saving for retirement, healthcare costs and transferring funds to younger generations. But trust in the plan only goes so far: Only 37% of American adults, many of whom have financial plans, said they have strong peace of mind about their futures, according to a recent Fidelity study. There is an answer: Talk about it. Parents who communicate completed financial plans to family are more than three times as likely to have confidence in their planning, the company found.

Regular family discussions can also benefit advisors by improving the likelihood that assets stay in-house when transferred to clients’ children. “You’re doing the right thing as a fiduciary, but secondly, it’s a no-brainer to tag in the next generation,” said Ryan Mumy, CEO of Sollinda Wealth. He tells his team to invite clients’ adult children to events, whether it’s a ball game or a big dinner, just something to put a face to the name.

Can’t We Discuss This Later?

Money talk is traditionally seen as taboo. Josh Norris, founder of LeFleur Financial, said a client once asked whether it was awkward talking to people about their finances every day. “She was a nurse who sees naked patients on a regular basis,” he said. “People just find discussing their financial lives to be difficult, even when they have a lot of money.”

One of the biggest challenges is that parents don’t want their kids to see how much money they have, said Michael Lockwood, founder of Oakwood Wealth Partners. “The parents are so afraid of creating trust-fund babies,” he said. “They want them to still be motivated and incentivized to find a career suited for them versus hopping around job to job because they know they have money coming to them.”

The Fidelity report also found:

• More than a third of parents who have experienced a major health event have never had an open dialogue with their adult children about financial and healthcare plans. 
• Concerning estate, healthcare and retirement planning, one-third of parents say they’ve never talked to their children, while only 20% have had many discussions.

Let’s Talk, Turkey. Many parents say they don’t know how to start the conversation. At the very least, they should tell their children where important financial documents are, Mumy said. “Beyond the grief of dealing with sickness, disability, hospital stay or death is, ‘Oh, what about the money?’” he said. “It piles on that anxiety.”

But advisors should help clients discuss more than numbers, said Joy Slabaugh, founder of the Wealth Alignment Institute. “Understanding the family’s values and intentions around wealth can be just as important as knowing what they may eventually inherit,” she said, adding that the hardest conversations often involve inheritance, unequal distributions and family businesses.