“To be cringe is to be free,” as the internet’s modern philosophers have proclaimed.

In that vein, great wealth brings great opportunity for families to enjoy life, give back to their communities and empower future generations — though it can also bring awkward conversations.

That’s because the written estate plan is only part of a successful intergenerational wealth transfer, according to Jesica Ray, senior lead advisor at Brighton Jones Wealth Management. Beyond drafting legal documents and trusts, families need to prepare heirs psychologically to manage wealth. This is best done gradually, through two-way conversations that set expectations. And it pays to start the estate-planning process early, make updates and plan for emergencies.

“People often ask me how long it will take to put an estate plan together,” Ray told Retirement Upside. “That’s not the right way to look at it. It’s an ongoing process.”

That’s a Bit Awkward

Any number of topics can make planning feel awkward or downright uncomfortable. Ray recently wrote an analysis about wealthy parents discussing prenuptial agreements with their heirs, for example. Parents want to celebrate their children’s joy and welcome a new person into the family, of course, but they may wonder what a marriage means for the family’s finances, especially in cases where the heir is expected to take over a valuable family business or inherit a very large amount of money.

“No one plans on watching their home go up in flames, yet we carry homeowners’ insurance,” Ray wrote. “You can position a prenuptial agreement as a type of marriage insurance. It’s not a prediction of failure. It’s more a layer of protection in case things go wrong.”

For families with businesses or significant assets, simply deciding who inherits what may not be enough, said Sean Houghton, director of personal trust services at New Hampshire Shores Trust. In these situations, an effective estate plan:

• Helps distinguish beneficial ownership from decision-making authority, while establishing clear fiduciary roles and addressing what happens when a family member’s professional role changes or ends.
• Creates mechanisms for resolving conflicts before they threaten the assets or family relationships.

Financial advisors can show their value by initiating and normalizing such discussions, Houghton said. The same is true when it comes to parents discussing inheritances with their children, some of whom may be better suited for receiving wealth directly, while others may require more structure and support.

No ‘Trust Reveal’ Parties. Another idea for advisors to bring to the table is dispelling the idea of a “trust reveal” meeting, where heirs learn for the first time what they will (or won’t) inherit. Such scenes make for great television because they dramatize a highly private and vulnerable moment for a family. In real life, a surprise inheritance meeting more often signals that important conversations were postponed for too long.

The more isn’t always the merrier.

Most people aren’t going to walk away from a raise. But there comes a point where higher earnings start to coincide with greater financial stress.

High earners report increased rates of delaying financial goals, worrying about retirement savings and struggling to pay off monthly credit card debt — trends that look surprisingly similar to those reported by lower earners, according to Goldman Sachs’ latest retirement survey. Some 42% of workers earning less than $100,000 and 36% of those earning more than $300,000 say they live paycheck to paycheck. Meanwhile, just 23% of those earning between $100,000 and $300,000 say the same, creating a U-shaped relationship between income and financial strain.

For advisors, that could mean looking beyond the traditional advice to simply cut spending and save more. Instead, there may be greater emphasis on how clients put the money they already have to work. “If workers’ saving ability is being constrained by a variety of forces, the answer among the industry cannot be continuing to tell people to figure out how to save more,” said Christopher Ceder, senior retirement strategist at Goldman.

Working Hard?

Day-to-day expenses, housing costs and debt payments are increasingly affecting clients’ ability to save, with two-thirds of Gen X, millennials and Gen Z expecting to delay retirement because of competing financial priorities.

Those pressures can also bleed into the workplace:

• More than half of respondents said financial concerns affect their focus at work.
• About a third said they’ve missed work because of money troubles, while roughly the same share said they’re likely to look for another job for financial reasons.

Financial Engineering. If clients — low or high earners — can’t simply save more, advisors can look at how their portfolios are positioned.

Greater access to private markets could give investors additional diversification and return opportunities, said Wyatt Lee, head of target-date strategies at T. Rowe Price. “If you’re just playing in the public markets, your opportunity set is limited,” he said. Private credit and private equity have historically generated excess returns relative to comparable public-market investments, he added.

Advisors also may want to steer clients away from becoming too conservative in retirement. “I don’t think we’re advocating that a 65-year-old should be having 100% of their portfolio in equities,” Lee said. “We’re recommending that they should still have a substantial exposure to equities, and they just shouldn’t be fully de-risked.”

The idea of “struggling” to spend money may sound strange to you spendthrifts out there. (We’ll cop to that.) For many retirees, however, it’s the reality.

Almost nine in 10 people over age 50 don’t feel free to spend their savings on things they enjoy, per a recent survey by Prudential. Among those with $500,000 or more in investable assets, 61% feel uncomfortable spending purely for enjoyment, even though many in this group have sufficient assets on paper to engage in reasonable discretionary spending. What gives? Most people inherently need to be given a “license to spend,” said David Blanchett, head of retirement research at Prudential Financial. This can come in the form of a detailed plan showing how current spending (discretional or otherwise) may affect their financial security in the future, particularly if markets should go south or inflation runs rampant.

“Our results support a lot of prior work showing spending confidence isn’t simply a function of greater wealth,” Blanchett said. “We should be helping retirees support not only their needs but their dreams in retirement. The solution lies in planning tools and advice that transform uncertainty into confidence.”

Respondents cited a range of factors making them uneasy with discretionary spending:

• 44% said they doubt Social Security will be there for the long term, raising fears of poverty in old age.
• 42% said inflation sparks fear about a reduced standard of living in the future, while 34% point to the cost of healthcare and long-term care.

FOMO vs. FORO

“Forty percent of respondents said they would prefer to leave money behind over the risk of running out, and over a quarter feel proud watching their balance not decrease,” Blanchett said. “I see this as the fear of running out, or FORO, versus the fear of missing out, or FOMO. It’s the advisor’s job to bridge that gap.”

Indeed, about half of respondents struggle to enjoy experiences now versus wait until it may be too late, with this tension felt even more among those with more savings. There’s also a clear gender divide, said Barbara Pietrangelo, a financial planner with Prudential Wealth Advisors, with women being 33% less likely to feel comfortable enjoying their savings than men.

“Spending money you worked so long to save can feel like a loss,” she said. “For my clients, having a financial plan that we build together which clearly shows their priorities accounted for, in a time frame they chose, helps to ease anxiety around spending.”