How to Help your Clients Start the Money Conversation with their Adult Children

Each family and generation has a different approach to start a money conversation. Some parents practice open dialogue and include their children in charitable investing decisions from a young age. Others have a hushed approach. Money isn’t discussed, and you’re expected to be financially responsible. 

Most adults learned math in school, not finance. You may not use algebra every day. But everyone should undoubtedly take the time to understand budgeting. With this education gap, many rely on their parents for practical money management skills. 

As your clients’ financial advisor, you’re here to empower them to have tough money conversations. These can be with their beneficiaries, family, and sometimes, themselves. 

Start the Money Conversation with your Clients and their Adult Children

There are several reasons why your client may be avoiding the big money conversation with their adult children. Between sibling rivalry, disagreements on decisions, and shame, your client may have some reservations.

Your role is to be their guide, offer support. Also be the neutral third party facilitating a financial family meeting. After all, money isn’t always easy to talk about and can cause conflict. Preparing for the money conversation will give you and your client the best chance at a successful family meeting. 

Start the money conversation discussing the big picture.

Your client may not be ready to bring their family into the financial picture. But getting over this avoidance sooner rather than later can benefit them more than they know. An honest and fair discussion can foster an open relationship. This helps their children improve their own finances, and the ability to address practical concerns such as decisions on health. 

Remind your clients the meeting isn’t to discuss dollars and cents. This money conversation should be a high-level overview of the family’s overall financial situation. Topics such as how the parents are funding their present lifestyle and how they plan to disperse their assets should be in the meeting agenda.

Depending on the amount of money, it may be acceptable for the parents to tell anecdotes about how the fortune was acquired. Also about how they want to pass it on to future generations. This is a perfect moment to talk about the parents’ charity giving intentions for the next generation if they have any.

Parents should try their best to address any questions that arise, but they should also let their children know that they may not have all of the answers or be prepared to share them just yet. 

Ask your client about their reservations.

These financial talks are necessary to reduce the probability of rage and long-term resentment, even if they are challenging and uncomfortable. This is particularly relevant if assets are to be distributed unequally among siblings, such as in the case of a special-needs kid or a family company.

For example, your client may have a family business, and one of their children could be working there full-time. That sibling may expect to be given the business and take over ownership one day. Their parents might have another idea and want equal distribution between other siblings. 

Airing this out at a family meeting can help your client overcome any fears they have with the support of a neutral third party mediating the situation. Talk to your client about their reservations about avoiding the money conversation. You can help them craft a communication plan that helps them feel confident about discussing their vision.

Strategies when your clients’ kids brush them off. 

Your clients may have already desperately tried to have the money conversation with their adult children – but they just aren’t interested. In this case, your role is to strategize with your client on how to get them to listen. A few options include: 

• Getting serious. Your clients may have to bring up the darker side of things – such as crossing the street and getting hit by a bus. While no one wants to talk about it, getting serious about the worst-case scenario may get them to listen. 

• Help your clients host an informal family dinner. Natural conversations can take place over a meal, and you can book a follow-up meeting for more serious topics after everyone has had a chance to warm up to the idea. 

• Plan a family event with your client. It doesn’t have to be anything special – maybe a walk or a day at the golf course. This will help lighten the mood where they can have open conversations about overspending or delayed retirement savings.

Discuss Spending Habits during the Money Conversation

No one likes to think about how important it is to live within one’s means, yet we all know that it is essential. To get your client’s adult children interested in budgeting, you must assist them in building a budgeting strategy that works for them. Some people like comprehensive excel spreadsheets, while others feel sick at the sight of them. 

If your clients’ children are the latter, they probably want something a little easier. It’s best to follow the 50-20-30 rule, which states that “fixed” expenses (such as rent, phone bills, and so on) should get 50% of the budget, savings should get 20% of the budget, and 30% should go towards spending. A wide range of web and smartphone programmes are now available to help people create goals and track their spending, making spreadsheets a thing of the past.

Discuss Debt

Debt from student loans and credit cards, in particular, tend to balloon quickly. First, your client has to comprehend the problem so that they can help their adult child overcome a significant financial strain. Depending on what generation your client is from or how they earned their money, they may not understand how this could happen. 

Your client should help their children evaluate their credit reports at least once a year. There are several reasons why these reports are essential, but the most important one is the fact that they assist the adult kid in figuring out their obligations and where they’re located. 

You should check into consolidation and refinancing options for their adult child if they have a large amount of student loan debt. The interest on credit cards and student loans will always be greater than the interest on savings and investment accounts. It’s best to focus on getting out of debt as quickly as possible.

 

Have you been struggling to find the time to be proactive with your clients? You don’t need to wait for them to come to you to start helping their adult children. At Leading Advisor, we help you overcome the roadblocks that are getting in the way of consistent growth. Contact us to learn more about our coaching program.