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“I don’t like Jerry.”
Bonnie was very direct with her husband, Bryce, as they returned home from a meeting with their financial advisor. “He didn’t look at me once after we sat down,” she continued, “And it’s not like he’s ever asked me what I think is important—like my work, my mother or your father.”
“What’s going on?” their 20-year-old daughter Sarah asked, entering the room and picking up on her mother’s tone.
“I don’t like our financial advisor,” Bonnie replied. “But he’s a friend of your father’s.”
Looking puzzled, Sarah asked, “That guy you play golf with, Dad?”
I’ve known this family for decades (though I’ve changed their names to protect their privacy), and this conversation they had is likely an increasingly common one as America experiences “peak 65”—the year in which more people turn 65 than ever before. The demographics show our destiny: We have 70 million baby boomers whose median age is 69, and very often they have aging parents and adult children who could become financially dependent on them. I’m living this “dream” today with a 90-year-old mother and my children, who are the ages of 31, 28 and 20. I also have a grandchild on the way.
As family members age and their retirement looms—and as careers and families grow—everyone has their own concerns and their opinions. (Like Bonnie, in my example.)
Retirement Is A Family Affair
A new survey by the Alliance for Lifetime Income indicates that relatively young, even “pre-retiree” Americans ages 61 to 65 are now experiencing what we had forecast for decades: the “sandwich” of demands from both younger and older family. The respondents are very often providing both financial support to adult children and serving as caregivers to spouses, parents, in-laws or other relatives. This effort changes the lives of those involved. And the research suggests that both boomers and older Gen Xers bear these burdens. A survey of retirees by the alliance found that 41% think they might have to live with their children.
Are You In Those Conversations?
My Depression-era parents lived frugally on a modest income for most of their lives with four retirement annuities from my father’s work in academic medicine. But they did not have enough financial wherewithal for the potential costs of long-term care. They did not want to live with their kids. They liked living in the warmer Florida climes, not in the chilly Northeast. So the first intense “family conversation” that my three siblings and I had with them was about how they would pay for care and, more important, where that care might be obtained.
I will spare you the family drama. The resolution was that they would eventually go to an expensive local continuous care retirement center in Florida. My mother hated the idea. My father was relieved. My siblings had mixed feelings. But we did the deal—which gave them a care annuity allowing for their transition from independent living to assisted living to nursing care, even hospice and memory care facilities. They would not occupy these until they had to. Mom was clear on that point. And that was 2015.
Fate Makes Tough Decisions For You
In the fall of 2016, my father received a pancreatic cancer diagnosis. At age 83, he knew he had no choice but to accept his condition and seek comfort, and the solution was the continuous care center, although he had to take it up sooner than anyone had anticipated. Unexpected health events are what we at the Alliance for Lifetime Income call “the moments that matter”—things that force families to take action whether or not they are ready.
My dad moved directly to the center’s nursing facility (and never left). With a rapidly growing elderly population, seats in these places are becoming more dear. My colleague, Tom West of Signature Estate & Investment Advisors, calls this the “game of musical chairs.” If you haven’t made a reservation, you might not have a seat when the music stops. Then what?
Don’t Wait For The Money
Every advisor has heard the big numbers associated with the “Great Wealth Transfer.” Statistics from Tiburon Strategic Advisors say $49 trillion of baby boomer and Silent Generation assets will flow toward Gen X and millennials.
But here’s where reality meets data: The people leaving their money are standing in the way of this transfer by living longer. My mother is the first in her family to reach 90. She won’t be the last. She gives generously to charity but holds on to most of the rest. “You need to be prepared,” she says. Her modest investable assets won’t be an opportunity for anybody until they are. She’s in good health—and in no rush.
Many advisors I know roll their eyes about the supposed bonanza—which seems very far away. The older generation still needs that money for all sorts of things they haven’t planned for, including possible health challenges. They’ll be dealing with variable healthcare costs. And meanwhile they want to age in place. They might still divorce … or succumb to financial fraud. These are all trends among aging Americans, of whom there are a record number.
So don’t wait for the money. Instead, lean in to conversations. Probe for reactions when you ask your clients what would happen if they ran into trouble. “What would you do if your mom needed full-time care?” “What is your plan for where you will live if you aren’t able to live safely in your home—alone?” That’s the real opportunity for you to be part of this “wealth transfer”—to be involved in the conversations that matter about the moments that matter.
Gen 2 Is Our New Engagement Partner
My mother does not talk to advisors (she never liked it). She talks to me.
Remember Bonnie, whom we discussed at the beginning of the article? She and Bryce asked me to be Bryce’s executor after firing “Jerry.” Their daughter Sarah is one of their four Gen X children. Bryce has faced health challenges, something the kids are aware of, and the family is concerned about his ability to live safely in his longtime home.
Their problems are a microcosm of the bigger issues: While the first generation continues to own its assets, the second generation is very much engaged with the forward use of those assets. And if advisors aren’t connected with Gen 2 now, each critical moment offers us an opportunity to make that connection.
Yet industry surveys continue to show that most advisors don’t actively engage client families. Ask yourself this question (posed by a longtime advisor friend of mine): Can you name the spouse and the children of your top 20 clients without looking at the files? If you have more than 20 clients, like most advisors, there is work to do with the rest, too. It’s worth the effort.
As a final thought, try this list of to-dos for growing your business with your existing client families in 2024:
1. Sort your clients by age.
2. Meet your clients’ spouses and partners—for the benefit of all.
Include in those meetings the family questions: Who will take care of whom? And when? And how?
Here’s another list of to-dos to keep in mind:
1. Commit to one family meeting with each of your oldest clients this year.
2. Work your way down your client list—chronologically.
Related: CEO Innovation Spotlight: Michael Liersch, Head of Advice & Planning, Wells Fargo