The family finance talk

Have you had a full and frank conversation with your adult children about money; the family finance talk?

A new study in the US has found that 64% of parents and children can’t agree on when to have conversations about financial preparedness.

The Intra-Generational Finance Study by Fidelity Investments spoke to 1,058 parents and 159 adult children.

Perhaps unsurprisingly, it concluded that personal finances are still a taboo subject for many parents and their adult children.

In my interviews with experts for the documentary I’m currently making about the Baby Boomer generation in retirement, a common theme has been the reluctance of retirees to talk to their adult children about financial planning.

This is so important because it presents an opportunity to build a plan during a lifetime, which can be implemented on death, rather than leaving behind a mess for all concerned to deal with.

Conversations about money also help should parents lose mental capacity in later life, perhaps needing residential care.

Rather than adult children having to second guess their parent’s wishes, they can instead put plans in place which were previously discussed, debated and agreed upon.

Fidelity in the US commented, “Admittedly, these discussions aren’t always easy, but there can be real emotional and financial consequences when they don’t happen or lack sufficient depth,”

We couldn’t agree more.

There is nothing easy about retired parents and their adult children having “the family finance talk,” but it is vital to do.

Often the best way to facilitate such a conversation is to engage with a Financial Planner who, in the first instance, creates a comprehensive Financial Plan for the retired parents.

Once in place, agreed elements of this Financial Plan can then be presented to the adult children, setting expectations about items including inheritance and care fees funding.

The Financial Planner can continue to work with the family to help answer questions and ensure a smooth transition in the future; the “cascade of wealth”, as it is known in the Financial Planning profession.

Approaching the family finance talk in this manner is an effective way to avoid misunderstandings and create clear expectations for the future.

It is not a one-off conversation, but something that needs to be repeated annually in order to remain relevant.

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