A Valuable Conversation Worth Having

Extended families gather for many occasions. Celebrations. Holidays. Life cycle events. Family vacations. The discussions at these events and gatherings are generally the same: updates on kids and relatives, grandchildren, health, politics, sports, food, etc.

Between the generations of most families, however, the topic of money is rarely discussed. These types of discussions should be happening. Sometime. Anytime. And sooner rather than later.

We all have unique and different family backgrounds and situations. I did not get my education in money, investing and estate planning from my parents. We grew up as a lower-middle income family. I know that my mom struggled financially and worked very hard to support me and my three sisters. Investing was not a relevant topic. How I would pay for my college education, how much I had to work and save money for college education was a very relevant topic.

Fast forward 30+ years… and now I advise people professionally about their money. We have many discussions about their finances, their goals and how to deal with the volatility of the world and financial markets. These discussions are critical, and the educational aspect of these conversations makes our clients better and more successful investors.

I now want my firm to emphasize an additional type of conversation. This is a conversation between generations. These can be difficult discussions, which is why they are generally avoided. But if these discussions take place, tremendous value and important long term benefits can result. Clients can have these conversations (or “family meetings”), or we can assist in facilitating them.

Many couples deal with estate planning. Most view it like going to the dentist; painful, put it off, but they eventually get it done. Once an estate plan is completed, it usually becomes a set of documents that remain locked in a cabinet. One aspect of the discussion that I’m addressing is to make the estate plan real. Make it a living and breathing document and set of plans. Talk about your intents and wishes. Now, while you are healthy and able to have the discussion.

I’m suggesting that parents and grandparents sit down with their next generation, or generations, and talk about their “family” finances. For example, my extended family is going on vacation later in June. My siblings and my parents will be together for a week. We should set aside some time to have a discussion of what will happen when each of them passes away. What is their intent? How will we handle things?

We have actually had this discussion, but it was many years ago. It should happen again. But most families have never had a multi-generational discussion. The topics can vary, depending on the financial assets (small, large or very wealthy), and the ages of the different generations.

At family events, the telling of family stories is how family histories are remembered. The discussion of money, both positive and negative, can be important as well. Parents and grandparents can share their financial and investment lessons, both good and bad, with their next generations. This would be very valuable.



Note: I would like to thank Nathan Dungan, for the valuable session he led on this topic at a seminar I attended in May, as well as Susan Weiner (@susanweiner), who wrote an excellent blog post encouraging financial advisors to write in a more personal manner, which inspired this post. Thanks to both of you.