WASHINGTON, Nov 21 (Reuters) - Don't look now, but your parents may have at least $100,000 more than you think they have -- you just haven't asked and they haven't told. That's the key finding of a new survey from Fidelity Investments about how families talk (or, more often, don't) about money.
Highlighting what it called a "vast disconnect," the investment company said that parents and adult children have wildly different views on how well parents are prepared for retirement and whether or not the kids will step in and care for their elders if and when they become ill.
The good news for the younger generation is that parents are, on average, better prepared -- to the tune of that $100,000 -- than the kids think they are. And while roughly one in four kids believe they will have to help their parents financially, a full 97 percent of parents say they will be just fine, thank you.
That disconnect comes because families are reluctant to (ahem) talk turkey about their finances, says Kathleen Murphy, president of personal investing at Fidelity. Parents don't want their kids to become overly or prematurely dependent on an inheritance. Their kids think money is a private affair best left undisturbed.
But when families do have that money talk, all parties typically feel relief, Fidelity found. And - what better time to start sharing than over Thanksgiving weekend, when everyone is gathered anyway? Here are some tips.
-- Schmooze it or lose it. "About two-thirds of family wealth is gone by the second generation and so is the harmony," says Johnne Syverson, a West Des Moines, Iowa, financial planner who runs intergenerational family meetings for many of his clients. "By the third generation, they are both about 90 percent gone." Talking about values and goals -- and how you want your funds deployed -- can help the family hang on to more money and more closeness through multiple generations.
"If we don't build good communications between family members around the Thanksgiving table and at other times, all the things we do to transfer wealth just don't work. They eventually blow apart," he says.
-- Have the happy talk first. Syverson suggests starting Thanksgiving dinner, or any other family meeting, with a prolonged gratitude session in which each person talks appreciatively and specifically about every other person at the table. "By the time you get done, everybody is crying and they get tears in the turkey," he says.
For particularly large groups, that may prove impractical. But it lets everyone start from a feel-good base, less likely to hurt feelings or have their feelings hurt when they get down to the more difficult financial parts of the conversation.
-- Plan a family meeting. Don't do the tough stuff at the holiday table, though many families do meet later in the weekend, while everyone is gathered. Make it somewhat formal, with an agenda, suggests Syverson. Among the items you can put on the agenda? Estate plans, family charitable goals, a family loan fund, long term care insurance (and who pays for it), how the next generation will pay for college, who will make healthcare decisions for family members, where assets are held, how the family does (or doesn't) use an adviser and more. Don't expect to get through that whole list in a day, especially the first time you meet.
-- Start early. Don't wait until there's a crisis, or even a life transition like retirement, says Fidelity's Murphy. "You can be a little less emotional and more analytical" if you discuss plans and events when they aren't staring you down immediately. And then you'll be ready when they arrive.
-- Consider the in-laws. Bob Maloney, a Holderness, New Hampshire, adviser who also facilitates family meetings for his clients, says he always tells them to leave their children's spouses out of the first meeting, so parents and siblings can speak openly. But Syverson says he tells clients to always include them -- they are part of the family. The moral of this story: There's no right or wrong answer, do what works for your family. But even if spouses are eliminated from first meeting, don't expect to exclude them forever.
-- Be specific, but diplomatic. You may be able to get your parents to disclose the specifics of their retirement plan if you tell them you are looking for advice about how to manage your own. Don't word questions in a way that can be interpreted by sensitive relatives as showing a lack of trust in their ability to handle their own finances. Murphy suggests that people may be able to open conversations by discussing the national financial situation; they can segue from fiscal cliff to personal finances.
-- Drive home the idea that not discussing these things can cost the family money. "One of the things you hate to see is when people have saved a lot and put a lot of thought into their legacy and they leave money on the table," says Murphy. That can happen when people fail to make appropriate plans, or fail to disclose them, so the generation left to make sure they are carried through don't know what they are supposed to do.
-- Respect privacy and independence. It's not cool to ask your kids how much they make, says Maloney. And it may be too prying to ask your parents to show you their financial statements. It may be enough to know that they have a financial plan and an estate plan and that you will have access to it when you need to; you may not need to know exact numbers, if you know where they exist.
-- Call in a pro. Some people feel more comfortable discussing all of these issues with a professional financial adviser, Fidelity said. One who is trained properly can run family meetings and ask the tough questions that nobody wants to ask of their own parent or child.
They can make sure the right documents are filed in the right way, so that the generations don't have to police each other. And, when the meeting is over and all the documents are filed, you don't have to face them over pie and coffee.