WASHINGTON Nov 21 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
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
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.