Family wealth: Surprising research

Key Points

  • While many families discuss day-to-day finances, larger discussions are less frequent
  • Estate planning matters can be particularly difficult to initiate, but the effort pays off
  • Couples who communicate effectively could apply those skills to talks with parents and kids

Do you feel uncomfortable discussing topics such as estate planning, health care needs and education financing with your children or parents? If so, you’re not alone. While it’s not uncommon to approach family money talks with a sense of apprehension, the majority of Americans forge ahead and talk things out anyway, according to our new Family Wealth Checkup study.

The result? Improved family relationships and dynamics as well as increased financial confidence, according to our research.

So what do family members discuss? What happens when the conversations take place? How does your family compare? And how can families improve their money-based communications? Here are answers to those key questions.

What we talk about when we talk about money

One key theme in particular emerged in the study findings: Families tend to avoid complex or longer-term financial topics in favor of more immediate expenditures. That’s particularly evident when it comes to parental relationships.

Family wealth and what we talk about

Family wealth and what we talk about

Seven out of 10 respondents commonly talk to their parents about managing current finances and paying for health care. But some subjects appear to be taboo. Only half have discussed life insurance with their parents — a crucial topic but one that can also be emotionally loaded for all parties.

Why? Some study respondents felt it “wasn’t their place” to raise estate planning issues with their parents, or they expect the conversation to be uncomfortable or lead to tension. Others said they simply don’t want to think about losing their parents.

“Families do talk about financial topics. Unfortunately, most of them don’t dig deep enough into them.”
Marcy Keckler, Vice President of Financial Advice Strategy, Ameriprise Financial

In a similar vein, parents avoided estate planning conversations with children because they didn’t feel it was appropriate or didn’t want their adult children thinking about death. 

Family wealth conversation barriersWhile nearly three-quarters of parents chat freely with their children about managing debt, 4 in 10 parents avoid diving into the realm of educational expenses — a key consideration, given the way college costs continue to climb.

Close to a third of couples also aren’t discussing educational expenses with each other. However, couples are the most aligned family members when it comes to financial communication in general. More than 9 out of 10 report they talk about managing daily expenses and long-term financial goals, including retirement.

“People do talk about tough topics. Unfortunately, most of them don’t dig deep enough into them,” says Marcy Keckler, Vice President of Financial Advice Strategy at Ameriprise Financial. “Skimming the surface might feel more comfortable in the short term. But doing so only delays the inevitable — and it can cause tension and disagreements between family members.”

Communication and confidence: What’s the link? 

The study found that financial confidence is closely tied to regular communication, and taking time to talk can preempt any discord. Respondents who report feeling confident about their family’s financial future are more likely to have frequent family conversations about:  

  • Long-term financial goals
  • Retirement planning
  • Inheritance/estate planning

“Confident families have regular conversations about money — and they don’t steer clear of difficult issues during those talks,” Keckler says. “They also start the discussions early. Talking through different scenarios is almost always easier and more constructive if you’re not under the stress of a life-altering event.”

The value of a neutral third-party advisor

Another key finding: Respondents who describe themselves as very confident in their family’s future tend to have financial advisors. One-fifth of respondents who work with an advisor also have a parent working with an advisor — and half of that population share an advisor. The biggest benefits cited? That their advisor will be able to better understand their full financial picture and help transition wealth from one generation to the next. 

“People told us that a shared advisor can understand the full scope of the family’s issues,” Keckler says. “That can allow the advisor to customize a plan for the family. Just as importantly, it can provide family members with a common, neutral starting point for money discussions.”

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