The #1 Hot-Button Topic for Wealthy Families

September 9, 2014

by Dan Richards

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In response to last week’s article on talking to clients about sensitive, “elephant in the room” issues, one advisor sent this email: “Great suggestions on how to raise difficult topics. Among my wealthy families, the elephant in the room is the difficulty getting parents to have open conversations with their adult children around financial issues and family succession.”

This issue is far from new – last year I wrote about “How five different advisors get families to talk about finances.” But a recent research report from UBS Wealth Management Americas reinforced the urgency to dealing with communication gaps around family finances. The financial and emotional cost when important topics go undiscussed is so great that in many cases, facilitating that conversation is the No. 1 way that advisors can make a positive impact in the lives of wealthy clients.

The last taboo in family conversations

Today, many people talk openly about same-sex marriage and legalizing soft drugs, topics that 30 years ago were seldom broached in mainstream conversations. For many families, talking about plans to pass on wealth is today’s last great taboo.

Research among affluent families suggests that while most Americans have up-to-date wills, only half have discussed inheritance plans with their children. According to the UBS report, just one in three (34%) have let their heirs know how much wealth they have.

Assets of $250,000
to $1 million
Assets over
$1million
Have an up to date will in place 78% 87%
Have discussed inheritance with children 53% 55%

 

When the UBS researchers probed for the reasons that families hadn’t talked about financial issues, there was a clear divide between benefactors and heirs. Heirs felt that the lack of communication was due to a lack of openness in talking about money, while benefactors felt such discussions might lead adult children to count on their inheritance.

 

Barriers to open conversations about money

 

Benefactors

 

Heirs

 

Gap

 Not a pressing issue 43% 31% 12%
 Don’t want children to count on inheritance 32%   7% 25%
 Don’t want children to feel entitled 27%  23%   4%
 Don’t talk openly about financial issues in our family 19%  46% 25%

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