The Modern Family Comes To Wealth Management

Every family has a history. With some families, that history—and often associated legacies—go back…


Every family has a history. With some families, that history—and often associated legacies—go back generations.


When it comes to family financial management for multi-generational clients, how do we manage expectations for all involved, especially as we are in the thick of the greatest wealth transfer in the history of financial services?


For financial advisors, the ability to tap into the family’s past business and investing successes, current financial situation, and future goals to leave a legacy is truly a specialized skill.


Few advisors have been trained to tackle all the financial, emotional and psychological challenges that the “modern family” brings to the table.


The good news, according to Steve Gresham, managing director of The Execution Project and Next Chapter (which partners with Financial Advisor magazine), is that advisors being trained how to tap into the great wealth transfer by knowing how to facilitate family conversations among the multi-generation clients base. “The best advisors have learned to listen carefully, understand family dynamics, bring in expert colleagues when appropriate, and know when and how to bring the family money values to the forefront of family discussions.”


Family Conversations: When To start

One of the biggest family dynamics questions in the world of behavioral finance is that parents want to know when the right time is to bring up legacy planning. Troves have been written about “the family conversation,” but it remains elusive for both deliverer and recipient of the message—both advisors and clients fear the worst when it comes to multi-generations of family members discussing its own family money values.


But it doesn’t have to be that way says Michael Liersch, Ph.D., and head of advice and planning for Wells Fargo Wealth & Investment Management and host of the Wells Fargo About Money podcast.


“The first family conversation is always the hardest,” says Liersch. “After that, the topic of money values can become normalized. People get more comfortable talking about how they expect to be involved, the taboo topics and how they express their owns needs, wants and expectations when it comes to the family and the family’s money values,” he adds.


For both parties, you need the right information at the right time. Both the deliverer and recipient have to be psychologically ready.


“We train our advisors to facilitate family conversations that spark awareness among all parties involved. Sometimes, family members are learning for the first time that the family business may be sold or how senior family members want the next generation to be involved in investment planning decisions,” adds Liersch.


When it comes to the family conversation, it’s important not to overwhelm G2 and G3 family members, says Jamie Kulik, CFP, vice president of financial planning at LPL Financial in San Diego.


“Start with awareness. Is the younger generation aware that the family employs a financial planner? If so, set up an in-person or Zoom meeting to start adult children or teens on their own financial journey. Show them how to budget and save and how to open an IRA or brokerage account with their own money,” advises Kulik.