How to Talk to Your Aging Parents About Their Finances. And Why It Matters Now.

Talking about money often doesn’t come naturally, and can be uncomfortable and unsettling for parents and adult children alike.

But as parents age, there’s a need to ensure they are on solid financial footing. It’s also important to know what resources you might expect to inherit someday for your own planning purposes.

“Starting it early so you don’t end up being faced with a crisis—that’s so critical,” says Jennifer Pline, head of wealth management at Cambridge Trust, a division of Cambridge Bancorp in Cambridge, Mass.

Here are some tips financial advisors say can make the process of talking to your parents about their finances go smoother.

Find Ways To Naturally Get Into The Conversation

Things work best when families have open dialogues throughout the years about money, but this doesn’t always happen. As early as possible, adult children should try to break down whatever barriers may exist and get financial discussions rolling, broadly at first and then more detailed as time goes on, financial advisors say.

“One easy entry point could be to talk to parents about Social Security and Medicare, topics that are likely to be on their minds as they approach retirement age,” says Rhian Horgan, founder and CEO of Silvur, a retirement planning app. “They’re talking to their friends about it anyway, so it’s not as much of a leap to talk to their children about it too, she says. Plus, it’s a teaching moment for parents and children, who will eventually have to deal with these issues themselves.”

“Those are money conversations, but they aren’t as awkward as asking what someone has in their savings account,” Horgan says.

“Another conversation-starter might be when adult children are doing their own estate planning, financial planning, analysis around college funding, tax-planning or the like,” says Laura Godine, director of wealth planning at Eaton Vance WaterOak Advisors in Boston. “If it’s mirroring your experience, and you’re going through the process, it can be a reasonable point of entry to ask your parents if they’ve gone through that process.”

“Even a minor health issue can be a natural springboard for future family discussions. Tell parents you are concerned about their health and the future and ask whether they would be open to having a further conversation about their finances and long-term health-care needs and desires,” Pline says.

Strategize And Stay On Point

Children should understand that it’s not just one discussion they need to have with their parents about these issues—ideally it should be a series of conversations that takes place over time, financial advisors say.

If you haven’t had any discussions about finances before, initial conversations should be more general and avoid getting into too many details too quickly, which can overwhelm or anger parents who feel their children are being intrusive or pushy.

“Also, don’t conflate conversations about finances with other important topics such as when to take away the car keys,” says Michael Liersch, head of advice and planning for Wells Fargo Wealth & Investment Management. “Each has its own time and place. A family meeting can be a good way to kick-start discussions. If getting started is a struggle, parents and children can both write down their respective questions and concerns to discuss at an in-person family meeting. Even if parents aren’t willing to share the answers, it’s helpful to get the questions out.”

Build The Proper Framework

It’s important to frame discussions so that parents don’t feel their privacy is being invaded or that their children are interested only in their inheritance.

“While the direct approach can be tempting, asking outright how much money your parents have generally isn’t advisable because it puts them on the defensive,” Liersch says.

Instead, you could start off by discussing broadly the effects the pandemic has had on people’s finances and say you want to make sure your parents feel comfortable financially. Approaching it this way can help you gauge how they are feeling about their finances. Are they nervous? Mildly concerned? Relaxed? How they respond will help you better determine what the next steps may be.

“Parents who have concerns about their financial well-being may not want to burden their children,” Godine says. “Knowing their children want to be involved may help parents to open up and overcome the anxiety they may have about talking about these topics.”

For wealthier families, there can be additional challenges because it’s often obvious the family has money and children don’t want their parents to think they are only after their money.

“Yet there can be real reasons why adult children would want to understand their parents’ finances,” Godine says. “For their own retirement planning and college funding, for example, adult children may want to better understand what kinds of choices they should be making. One way to approach wealthier parents is to express a sincere interest in making sure the parents’ wishes are put in place. Ask questions such as: Are your plans in place? Have your wishes been memorialized? Can I help you in any way? These types of general questions can help parents feel more comfortable and not backed into a corner. It allows for a more open dialogue. It can be an opening point for parents who are comfortable doing so to share some of their wishes.”


Source: Barron’s