Many of us have been there before. As you enter adulthood, you find yourself in a role reversal with your parents. No longer are you being nagged – you’ve become the nagger.
Maybe you pester them to perform some long-overdue maintenance on their house, get more exercise or eat a better diet. Or maybe you’ve become concerned that they aren’t taking their finances seriously enough. It’s not unusual for you to suddenly become the one who is getting things done for your parents.
Financial advice is a common area that can go ignored. How bad is it, you ask? Well, in 2017 just 9% of adults in the UK received regulated financial advice.1 It’s often true that the 91% without a financial adviser either don’t feel they have a financial need, or maybe believe that can’t afford one.
Even so, large numbers of adults have a significant amount of wealth and either aren’t receiving any advice or haven’t for quite some time.
What to do?
As wealth managers, we often find ourselves discussing how clients can engage their children with their wealth and wealth planning in the most appropriate way. The better prepared future generations are to manage wealth, the more likely it will last for the long term. But these family discussions can happen both ways, particularly if adult children are more familiar with financial solutions or issues than their parents.
For high net worth individuals, this is even more important because the stakes are higher. Larger amounts of wealth and more complex estates require careful financial planning around the areas of tax allowances, care fees and inheritance tax (IHT).
Yet, the Money Advice Service (now called the Money and Pensions Service) found that 58% of British parents say they find it difficult to talk to their children about money matters.2
This will need to change soon as both Generation X and the Baby Boomer generation – previously the largest cohort of adults the world has ever seen – move into old age and pass the reins to the next generation. Millennials are going to be the largest adult segment in a few years’ time, and they are growing their wealth at a rapid pace. Research from Deloitte suggests that the aggregated net worth of global millennials has more than doubled since 2015, with estimates ranging from US$19-24 trillion.3
One thing we know about Millennials and the younger generations is that they have different behaviours from previous generations. When dealing with financial advisers and wealth managers, they are much more shrewd, making decisions only after conducting thorough research. Deloitte said they consult peers and media before acting on adviser recommendations; less than 10 percent of investment decisions are made alone.
This puts younger adults in an ideal position to play a greater role in influencing their parents’ decisions when choosing to seek financial advice. It’s often said that the best trust of all is the trust between family members. The more informed adult children become, the better they can guide their parents to the right decisions for their financial arrangements.
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