How to Have Conversations About Family Finances
By: Brannon J. Fisher, CFP®
When it comes to difficult conversations, discussions about family financial matters might be at the very top of the list. Money is a highly personal subject for most people — when you add in family dynamics, the potential for misunderstandings, hurt feelings, and damaged relationships is even greater.
As difficult as these conversations can be, it’s important not to sweep them under the rug and ignore them. This could lead to even bigger problems down the road if important issues related to family finances aren’t addressed openly and honestly.
Managing Family Finances
If you’ve been avoiding having important financial conversations with family members, don’t put it off any longer. Here are a few tips to help ensure that your discussions are productive and meaningful:
• Plan the right setting. Give careful thought and planning to when and where the conversation will take place. For example, you could plan to have it during a family gathering or ask family members to plan a special trip to your home or a central meeting spot for the discussion. The most important thing is to make the setting as relaxed and comfortable for everyone as possible.
Family members will probably be wondering what you want to talk about, so don’t be evasive. Explain that there are some important family financial matters that need to be discussed so you’re calling everyone together for this purpose. This will help everyone be better prepared for the meeting, both practically and emotionally.
• Frame the proper context. In most cases, family financial matters go beyond dollars and cents. Just as important are the values and legacy that lie beneath the financial foundation. The family patriarch, for example, may have built a successful business from the ground up through hard work and persistence and want to pass these values on to the next generation.
For other families, charity and philanthropy are critical. These discussions may be centered on creating a family philanthropy plan and mission statement that details your family’s priorities and philosophy with regard to charitable giving. This plan should address how your family values money and wealth by putting them in the proper context.
• Prepare for the discussion. You should go into the conversation with a clear idea of what you want to talk about and how family financial issues should be resolved. For example, maybe you need to discuss how your assets will be distributed to family members after you pass away, or what kind of financial support you will (or will not) provide to adult children and grandchildren.
Consider creating a written agenda (or family financial guide) for the meeting and sharing it with family members beforehand so everyone can be better prepared. And make sure everyone is comfortable sharing their input during the meeting and no one feels intimidated.
• Get the conversation started. Getting the ball rolling can sometimes be the hardest part of family financial discussions. The best approach is often to just dive in, starting with the agenda. You can also ask open-ended questions to stimulate discussion, like what are some important financial lessons family members have learned over their lifetimes and how did their family upbringing contribute to them?
Talking About Inheritances
Discussions about inheritances can be among the most difficult of all family financial conversations and require extra planning and sensitivity. This is especially true in wealthy families with large estates where children might have unrealistic expectations about what they will inherit.
Start by explaining your values and how you expect heirs to carry on your financial legacy after you’re gone. This may include family charitable and philanthropic endeavors you expect them to continue after you’re gone. Also make it clear to your heirs that even if they will be inheriting a large estate, you still expect them to get an education, work hard and build a career. Make sure they know that the inheritance isn’t an excuse for them to coast through life or act irresponsibly. It’s important to share your financial advice about inheritance.
One of the biggest challenges in discussing inheritance with family members is weighing the concepts of fairness and equality. Some families believe in an equal split of the inheritance among heirs, while others believe that fairness necessitates an unequal split. Regardless of what you decide, be prepared to discuss it with your heirs and explain your thinking to minimize hurt feelings.
How A Family Financial Advisor Can Help
A Simon Quick advisor can help you plan and strategize the best way to have family financial conversations. To learn more, please contact me at bfisher@simonquickadvisors.com.
About Brannon Fisher, CFP®
Brannon joined Simon Quick in April of 2019 and helped extend the firm’s reach into the Rocky Mountain region by establishing an office in Denver. He is responsible for new business development and works closely with the New Jersey-based Client Advisory teams to provide ongoing services to our valued clients. Brannon holds degrees from Colgate University, CU-Boulder, and Dominican University of California. He remains involved with higher education by volunteering for Greenhouse Scholars as a mentor, career advisor and selection committee member. Brannon, his wife Mandy, and his daughters Waverly and Layla enjoy a variety of active outdoor pursuits and host a revolving cast of foster pets for Mandy’s nonprofit animal rescue, Old Dogs New Digs. To learn more about Brannon, connect with him on LinkedIn.
DISCLAIMER
Simon Quick Advisors, LLC (Simon Quick) is an SEC registered investment adviser with a principal place of business in Morristown, NJ. Simon Quick may only transact business in states in which it is registered, or qualifies for an exemption or exclusion from registration requirements. A copy of our written disclosure brochure discussing our advisory services and fees is available upon request. References to Simon Quick as being "registered" does not imply a certain level of education or expertise. No information provided shall constitute, or be construed as, an offer to sell or a solicitation of an offer to acquire any security, investment product or service, nor shall any such security, product or service be offered or sold in any jurisdiction where such an offer or solicitation is prohibited by law or registration. Additionally, no information provided in this report is intended to constitute legal, tax, accounting, securities, or investment advice nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk. It should not be assumed that future performance of any specific investment or investment strategy will be profitable, equal any corresponding indicated performance level(s), be suitable for your portfolio or individual situation, or prove successful.