Next Generation Planning

Apr 19, 2023 10:14:01 AM

Picture the classic movie scene - someone has just died unexpectantly, and the family has convened in an estate attorney’s office for the official reading of the will. The scene plays out as we see the faces in the room… shock, awe, disappointment, or total bafflement.

When major life events come without warning, everyone involved wishes they had been more prepared. However, there is a way to prevent this cinematic trope from becoming real life. It starts with having a frank conversation with all generations of your family about the topics most of us feel uncomfortable discussing: health, wealth, and inheritance.

We are now entering the most significant wealth transfer period in history. As any Gen Xer can tell you, their parents grew up during a time of great prosperity. After WWII, young adults could enter the workforce with little to no debt, housing was plentiful, and even high school graduates could afford to buy a home on a minimum hourly wage. Decades of economic wealth followed. As a result, legacy planning became essential for allocating multi-generational wealth.


Baby Boomers, born between 1946 and 1964, have accumulated substantial wealth and most enjoy some level of financial well-being. However, Gen Xers (1965-1980) and Millenials (1981-1996) face a different landscape. Boomers hold more than 53% of all wealth and assets in the U.S. economy.

By comparison, Millennials hold just 4% of the country's wealth. These younger generations are saddled with hefty student loans, rising interest rates, and cost of living. Growing wealth hasn't been at the top of their lists - it's more about survival.

As a result, younger generations are less likely to invest in the stock market when compared to previous generations. Many suggest this is due to being more risk-averse, having come of age watching their parents financially struggle during the 2008 global financial crisis. As a result, younger generations have less room for error and may seek alternative investment solutions.

Explore VGAs Risk Managed Investment Strategies.

“Over the next couple of decades, Baby Boomers are expected to pass down $30 Trillion in inheritance. This transfer of wealth could have an impact on the economy and the lives of those who receive it.” Gitnux 3-21-23

Yet, it’s not just about passing down wealth to adult children. It’s about preparation and transparency while keeping an eye on our ever-changing economic landscape, which needs to be addressed by all generations of a family.

By 2030, all Boomers will be over 65, and nearly 40% will be between 75 and 84. The most important conversations that should take place between generations will be challenging late-in-life topics like change in control over financial decision-making, retirement withdrawals, long-term, and end-of-life care, transparency around planning and wealth, and multi-generational engagement.

Generational wealth planning

Data suggests that 64% of wealthy individuals have yet to talk with family about how they plan to pass on their assets - and only 30% of adult children have discussed how their parents will pay for care as they age. Moreover, a staggering 68% of Americans report they have not talked about end-of-life care at all.

Many feel uncomfortable with these topics, but these conversations should occur sooner rather than later.

Take the opportunity to strengthen relationships within your family by having moments to explore the meaning and emotion of significant life events. Many investors and their families are looking for support and resources from their financial representatives in the areas of:

  • Inheriting money
  • A major gain/loss of income or assets
  • Death of a spouse or loved one
  • Significant health issues/wellness
  • Family dynamic changes such as divorce

Advisors should be proactive about preparing clients for the transition of wealth by involving the younger generations and helping them to tackle uncomfortable topics. Taking a team approach can make these subjects more manageable. Consider the following talking points when starting conversions with an advisor or family members or, ideally, both.

Health, Long-Term and End-of-Life Care 

Even before Boomers start to address their long-term care or looming mental health concerns, paying for health care is the #1 financial concern of older investors. Families tend to avoid discussing these issues, especially with their grown kids. 

Complex Modern Families

71% of investors believe financial guidance and solutions are geared toward “traditional family relationships.” Advisors should tailor their advice to match the complexities of each situation. Only 56% of solo households have a financial plan, and heterosexual, married-with-children families represent only one-third of American households. There are also diverse generational perspectives. Each generation has different values, attitudes on money, views of technology, investment profiles, and social experiences.

End of life planning

Women as Primary Decision-Makers

70% of married women will become widows, and the life expectancy for women is five or more years longer than it is for men. By 2030, women are expected to control as much as $30 trillion in financial assets. Many women are prepared to manage the duties many had shared with a spouse, but many may not be. Preparation is KEY. In light of such a dynamic shift in wealth management, advisors should be prepared to meet the needs of women investors

Building transparency around wealth and planning is the first and most crucial step families should take toward building trust between generations. Finding an experienced advisor guiding families through these often uncomfortable conversations is the best way to start. Transitioning control over decision-making is never easy, but if there is a guide with a plan already agreed upon, the process can become much more compassionate.

Just imagine how good it will feel to know that your children and grandchildren will clearly understand your wishes. Having a plan brings peace of mind. If you are helping to care for an aging parent, the last thing you’ll want to discuss is their money.

Getting these often uncomfortable or difficult discussions accomplished early is the best way to ensure that all generations are on the same page. Having all steps laid out in advance will make the transitions much smoother. So when they make a cinematically genius movie about your extraordinary life, the director must get a little more creative with the ending—no tropes about it.

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