More than half of parents have not discussed their net worth with their children. And while 95% of adult children say they are ready to manage inherited wealth, one-quarter of parents disagree.
These and other challenges emerge from Fidelity Investments’ recent Family & Finance Study, revealing persistent communications barriers across generations. Issues wealth managers can play important roles in mitigating.
“As people get older – especially past 70 – they often become less willing to talk about things like estate planning, long-term care or how their family can be involved in planning and decision-making,” said Timothy Habbershon, managing director and founder of the Fidelity Center for Family Engagement. “But with trillions of dollars preparing to change hands, there are millions of families going through generational transitions. This is a unique opportunity to start planning conversations that can create confidence, closeness and peace of mind for years to come.”
The study reveals that 70% of parents have created a will or estate plan. But 68% have yet to share inheritance details with their children – details that may include not just money, but also real estate, family businesses or other valuable assets. Topics often requiring more detailed conversations, which can align expectations, reducing present and future stress. The study notes that when families engage in open dialogue, confidence and preparedness rise significantly. Wealth advisors can play positive roles in the process, sharing expertise and information that can bridge generational divides.
“The advisor can sometimes be the buffer for difficult situations,” said Mark Benskin, VP for wealth management at American Bankers Association. “Other times, the financial advisor is the messenger or needs to educate, facilitate and use planning as a tool to illustrate and describe what success looks like in the transition from Gen 1 to Gen 2.”
The study shows that spouses are talking significantly more to each other about financial issues than to their children. For older baby boomers (over age 69), the gap is greatest for talking about managing ongoing health and care. For younger baby boomers, the largest gap is around wealth transfer.
The objective is not just to smooth the transfer but to avoid serious conflict on the way.
“There is also the situation that I saw at an alarming rate during the beginning of the Great Recession and well after: Many children who know the extent of wealth held by the parents begin feeling entitled to it,” Benskin added. “One child and then all the children start making demands on dividing up property, well before mom and dad have passed.”
The study underscores that parents who are actively talking with their children are more likely to have confidence that their plans will be carried out seamlessly and to believe their planning will create closeness in the family. The study advises starting conversations early – even small steps such as talking about values or financial literacy can build momentum to more-detailed discussions.
The parent sample was designed to reflect all U.S. parents age 55 or older with at least $500,000 in investable assets and who have adult children ages 25 to 54. The adult child sample was designed to reflect a matched sample of all U.S. adults age 25 to 54 who have a living parent age 55 or older with at least $500,000 in investable assets.
