July 7, 2017

Family Finances: Starting the Conversation About Generational Wealth Planning

In the U.S. today, many families are beginning the process of transferring wealth to the next generation. For parents, this can feel daunting, uncertain, and intimidating; it can be a long and challenging transition. Some families want to start earlier, while others prefer to wait: there’s no right way or time to begin the process. Fortunately, in either case, there are steps you can take to facilitate a smooth transfer of wealth. If you are unsure of how to open the dialogue, read on for some helpful ideas.

A Family History Lesson

For the younger generations, learning where your family came from, your financial history, and how your family acquired their wealth can lend valuable perspective, and can launch further discussion. Discussions around family finances often uncover complex emotions and strongly held values, which almost always play a role in the decisions parents and other family members make when considering investment strategies, trusts, and other wealth-saving choices. Understanding your parents’, siblings’, and your own values with regard to money is extremely important, and can help you find common ground when conflict arises.

Making the Introduction

An easy way to include children and/or grandchildren in the conversation and pass on financial information is to introduce them to your personal wealth advisor. Your financial advisor is an important team member, and introducing them to your children helps build that relationship. If you don’t feel like you have all the answers right now, an advisor can be a rich source of information and someone to trust during planning sessions. Your advisor may be able to assist as a mediator during family meetings to facilitate productive dialogue and guide the discussion. There is no single “right time” to make this introduction, but when the next generation is ready, sharing the relationship with an advisor you trust can help bridge the generational gap. A good wealth advisor can also help connect you with other resources to address your specific challenges, such as a consultant who can help with generational transition issues in a family-owned company, for instance.

Starting Early

Whether you choose to start talking about family finances when children are younger or wait until well into their adulthood depends on your family dynamics and situation. However, our advisors stress that some strategies take time to implement, so an early start may mean more options. Even if you don’t begin the conversation early, you can start the planning early. Work with your advisor to develop a transition plan that meets your needs, and be deliberate about when that plan will include your children and/or grandchildren.

Navigating the process of transferring wealth can be a challenging and sensitive time for all generations. By opening the conversation and starting a productive dialogue, you can avoid emotional and financial distress, and create a more positive, productive, and lasting future for you and your loved ones.