Mother Knows Best – But Advisors Can Help Families Discuss Money!

Yesterday, I went to the florist to pick out some flowers for Mother’s Day. On the walk home, I was reflecting on the values my mom has instilled in me throughout my life. One thought that really stood out was her emphasis on the importance of education. She views knowledge simply as the tool that’s necessary to make better decisions. The concept of passing on values and knowledge to family is something that resonates with me as an advisor, but it’s an area where I see clients struggle when it comes to their wealth. 

Holding family meetings is a topic I touched upon in a previous blog post about helping future generations without enabling them. Partnering with your CI Private Wealth Advisor to help plan and moderate these family meetings can add value across multiple generations. Here are a few high-level considerations to think about as you prepare to educate your children about family finances.

Identify a catalyst

When is the right time to start sharing information about your family’s financial situation? Although I’m a proponent of “sooner is better,” it’s easy to understand why some people may hesitate. An alternative solution is to plan your first family financial meeting around an “engagement catalyst.” I think of transitional events like the sale of a family business, a child starting their first job, a child’s marriage or a grandchild being born as good catalysts. Those milestones can give purpose to the timing of the meeting and may ease some of the awkwardness if your family typically doesn’t discuss finances as a group.   

Select the participants

Who should be involved? The parents will likely know best. In my experience, you’ll want all your children involved because the whole purpose is to equip them with the knowledge they need to make better decisions about their own financial future. Beyond that, it’s up to you to determine whether it’s appropriate for additional family members to attend, such as a child’s spouse. If you don’t have children, consider involving any family members or other loved ones who may be beneficiaries of your future estate.

You may also want to have other professionals present, depending on the depth and complexity of the information you plan to share. I have been in family meetings alongside clients’ trust and estate attorneys, accountants and insurance professionals. Not only are they able to provide expert insight on strategies and solutions, but it could also be practical for the next generation to meet your team and become familiar with them.         

Prepare the content and conduct the meeting

What should we discuss? This is the beauty of being in control—you have a blank canvas to work with. I believe critical conversation that clients and advisors must have pertains to the level of transparency desired in these meetings. For the open and trusting client who is comfortable divulging all financial information, including account balances, to their children, the potential conversations are endless. They can range from a deep dive into the portfolio holdings to running projections on what their inheritance might be.

In reality, most clients are not that comfortable with full disclosure. For those who prefer to start by keeping these discussions at a higher level, here are five ideas for the family meeting that are worth contemplating with your advisor as you prepare the meeting agenda:

1. Build out a family tree and use it to talk through the history of your family’s wealth. It may help uncover the values and work ethic of different family members. It could lead to a greater appreciation for both the creation and responsible transfer of wealth through generations.
2. Create a family mission statement with the goal of communicating your values to your children and intentions for the distribution of your family’s wealth. It can help get everyone on the same page and, ideally, prevent future disagreements or misunderstandings.
3. Review an estate plan flow chart. This doesn’t have to be elaborate or include any specific numbers but can serve to illustrate the flow of assets between different entities (individuals, trusts, charities, etc.). Again, it’s useful for everybody to hear the same message firsthand.
4. Assign roles and tasks to each family member to help promote engagement and responsibility. Be creative! I had a client couple assign their daughter as the family’s Chief Travel Officer, and her job was to plan an annual family trip on a given budget. It gave their daughter a sense of ownership and made her feel comfortable participating in the meeting and discussing finances.
5. In general, it may be a good idea to gain a sense, in advance, of what the next generation is interested in or curious about so that those points can be addressed at the meeting.

Post-meeting engagement

What’s next? My advice is to use this meeting to set a precedent and agree on the frequency of family meetings going forward. We believe the key to success is to continue engaging the next generation. A common practice for advisors is to make ourselves available to meet with clients’ children one-on-one to discuss their individual financial situation confidentially. It helps keep them focused and continues the education process while alleviating some of the pressure from their parents. Within the family, I encourage parents to keep the line of communication open and solicit questions and topics of conversation from their children.

Think about the sharing of knowledge and values the way my mom does: it’s often the tool that’s necessary to make better decisions. Since money can be a highly personal and potentially contentious topic, I recognize that these conversations may be uneasy. To help make the process run smoother, consider partnering with your CI Private Wealth Advisor to guide your family through these important conversations so they’re as productive and comfortable as possible.

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