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Failure to Communicate Can Lead to Disagreements About Family Finances

Parents and adult children more comfortable talking to a financial advisor than each other

| BY Donald Liebenson

Parents and their adult children are more comfortable talking about family finances with their financial advisor than they are with each other. What we’ve got here, a new Fidelity generational finance study, is a failure to communicate that can have emotional and financial consequences.

The intra-family study found that nearly all parents and their adult children surveyed agree that it is important to have frank conversations about such financial, health care, and retirement issues, but there are substantial disagreements over the timing of these talks. Thirty-seven percent of children believe they should occur well before their parents retire or develop health issues, but only 27 percent of parents agree. They are more likely to hold off on these conversations until they near retirement or actually retire.

Children are under the impression that their parents worry about money more than they say they do. Nearly half (46 percent) think their parents worry about their financial future at least once a month, compared to 32 percent of parents who say they give the matter this much thought.

What are the barriers that prevent parents and their adult children from having substantive and productive talks about personal finances? Thirty percent of parents said they don’t like to discuss their retirement plans with their children because the parents don’t want them to count too much on their inheritance. The primary reason adult children cite is that money issues are private and none of their business.

The failure to have in-depth conversations about in-depth discussions about family finances creates misconceptions within families, the report found. There tends to be, for example, limited agreement about the car for aging or ill parents, with 97 percent of parents and children in disagreement on whether a child will take care of their parents should they become ill.

In addition, though 67 percent of surveyed parents say they have already factored in potential healthcare costs into their retirement plans, they have not fully communicated this strategy to their children.

On the subject of estate planning, 70 percent of parents and children disagree on the depth of the conversations that have been conducted, with only 19 percent of children believing the discussions were adequately detailed. The outcome is that children underestimate the value of their parents’ estate by more than $100,000, on average.

“Given the economic pressures facing families today, it’s troubling that detailed conversations are not happening, especially among those in the sandwich generation who may be grappling with competing financial priorities ranging from planning for their own retirement and paying for a child’s college education to dealing with eldercare, estate planning and retirement challenges with their parents,” said Kathleen A. Murphy, president of Personal Investing at Fidelity Investments in a statement. “Whether it’s a parent facing a shortfall in retirement income or an adult child weighing the tax implications of an inheritance, too often discussing these issues is considered taboo within families, but real emotional and financial consequences emerge when such conversations don’t happen or lack sufficient depth.”

Family finances and health issues are of paramount concern in Millionaire households, according to Millionaire Corner research. Sixty-eight percent are concerned about the financial situation of their children of grandchildren, while nearly half (48 percent) worry about having enough money set aside for retirement and having someone to care for them in their senior years. Fifty percent said they are concerned about caring for their aging parents.



About the Author


Donald Liebenson

dliebenson@millionairecorner.com

Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.  

A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.