Multigenerational Living Is On the Rise. Here’s How Advisors Can Help

Living with your parents isn’t everyone’s cup of tea.

But multigenerational living is becoming more common, and advisors need to know how to manage these types of households. According to Pew Research Center data, the share of the US population in multigenerational homes — defined as those with two generations of adults older than 25 and grandchildren younger than 25 — has more than doubled over the past 50 years. This creates a problem for “financial caregivers,” said Laura Varas, founder of the data firm Hearts & Wallets, since current advice options don’t tend to address their needs. 

“This is a real opportunity for advisors,” she said, “and when it’s done well, a source of extraordinary and lasting gratitude that heirs feel to the people that help them.”

Home Again

The rise of multigenerational living coincides with the rise of financial caregiving, which could mean anything from paying a relative’s bills to acting as their power of attorney. About 36 million households are currently involved in some sort of financial caregiving, according to Hearts & Wallets. Varas said it’s a common misconception that everyone in this role is in their 50s, often called “the sandwich generation,” since many financial caregivers are actually in their teens, or even older parents looking after adult children.

Another misconception is that addressing these types of households is always about inheritance. Older generations typically don’t have a huge inheritance to pass on, Varas said, making the more mundane tasks, like managing a loved one’s medical bills or dealing with estate documents, the most important. Advisors can step in when it comes to things like giving adult children access to a parent’s bank account or spending someone’s assets as they would. According to a recent report from Hearts & Wallets:

• Nearly half of households are willing to pay for one or more professional services regarding financial caregiving, with the figure rising to 70% for households already providing caregiving.
• About 1 in 5 households find managing their loved ones’ finances “very difficult.”

Closing the Gap. Intergenerational living is more common among certain demographics, with the proportion of Black, Hispanic and Asian multigenerational households being roughly twice that of white households, according to Pew data, making the need for specific financial advice among these households more pronounced. Men are also more likely to live in multigenerational homes than women.

“There really should be services that you can pay for that will help with financial caregiving,” Varas said. “There are many households that need it.”