Talking money with family: the art of the difficult conversation

Talking about money with family can be tricky. The mere mention of inheritance implies the death of a loved one and a massive change in family dynamics, so encouraging your clients to have those conversations is no easy feat. Here, in our guest post with financial planner, Siobhan Thomas of Quilter Financial Services, gives her take on how to help your clients broach these often-awkward financial conversations.

As financial advisers, most of us have had conversations with clients where they tell you their parents have a holiday home in Spain, their Mum or Dad owns a successful local company, or they’re the landlords of multiple properties. If you’re anything like me your mind immediately considers how the older generation’s finances could affect your client’s financial future – and that of their own children.

But how do you broach that sometimes touchy subject? Where do you begin in opening up the conversation to make sure financial planning for your client considers the whole picture, and not just the here and now?

Finances within families are often more woven together than most of us realise and consider. Not only with regards to inheritance, but joint ownership of property, investments for grandchildren and parents, there is a lot that happens over time that we as financial advisers are sometimes not party to. But by examining how my client’s current and future wealth are connected to other family members is key to planning for the journey ahead. To do this, we initially have to explain that to them, and they have to have that conversation with the extended family members. 

Start with the financial fact find 

When I first meet clients and begin helping them through their finances, my role is to chat through events and circumstances they may not have considered pressing or relevant to them at that time. Our role as financial advisers is to look at their finances in their entirety.

3 important financial situations to consider:

• Past finances and financial strain or success 
• What they want to achieve financially - by when and for who 
• What they want to leave, if anything. 

In those early fact-finding sessions, chatting about the possibility of future inheritance isn’t something everyone considers in their overall financial planning. But for many people it will form part of their future finances.

Family finances – how to talk about money 

By explaining the family finance connection, you help them to understand and navigate through some intergenerational money conversations which, let’s be honest, can be pretty difficult.Lots of us don’t talk about money with our parents. Hodge’s own research for the 'Money - it's all relative' campaign, shows 56% of people are embarrassed to ask family for financial help and only 13% of parents have discussed inheritance planning with their children. So, unless we’re talking about teenagers asking for pocket money, it seems these conversations can be fraught with anxiety.

However, as financial advisers, we have a duty to help facilitate these conversations for the good of our clients.

Four key messages to share with your clients about these conversations: 

• It can help protect their financial legacy if wealth preservation is the aim 
• It could help them plan for the future of their children and grandchildren 
• They can make sure their children are financially secure and aware for the next few years 
• It offers peace of mind in knowing their family is financially secure and prepared. 

Financial planning – your role as an adviser 

Treating the need for this much needed conversation with understanding and offering services to the parents of your original client is always putting your best foot forward.

Ultimately, if a future inheritance creates a potentially large tax bill for your clients to pay – it’s key to acknowledge and discuss how they would manage that and put some plans in place.

Of course, talking intergenerational finance isn’t just about possible inheritance, it’s also about the decisions your clients make and the impact that may have on their children. 

For example, deciding on savings for the children to help towards university fees or a first house purchase could have a life changing impact for them and one that needs to be considered with all the information at hand. 

For some clients, having this chat is the first time they would have spoken to their parents about money. By having a trusted relationship with your client, you can be the bridge that brings the generations together on this subject.  

It’s not easy to discuss but I always suggest when the opportunity presents itself to let their parents know they have been undertaking financial planning – and that their adviser highlighted the potential considerations about equity release or inheritance tax. This opens up the conversation on these highly sensitive subjects with the wider family.

As an adviser, being thoughtful and having empathy is key when being part of these sensitive conversations, but just as important is listening carefully to what clients from all generations are trying to achieve from the financial legacy they’re building or leaving – and how that will affect future generations. 

As sensitive and as awkward as it can be, there’s no getting away from the fact family finances are interwoven between generations. What grandparents leave will have an effect on the generations after them.

This is why it’s so important that, as advisers, we take a holistic view of clients’ finances. If we help facilitate these vital family finance conversations, we’re inevitably helping our clients plan properly for the future.

Siobhan Thomas is a CF7 and CF8 qualified financial planner with more than 17 years’ experience in financial planning. She became a financial adviser after looking for financial advice for her grandmother and being unable to find any female advisers. She was also drawn into financial planning as it combines her Masters’ degree in psychology and her interest in helping others manage their money. Siobhan lives in Cardiff with her husband, two young children and two naughty dogs. She loves bike rides with her family and watching her local rugby team Cardiff Blues.