All In The Family—Making Money Talk Easier

Parents have to think of their adult children as adults. Even if they have not always proven themselves to be the most competent at managing money at 20 years old, they may be forty-five now. This is not the time to remind your son or daughter what a screw-up they were when they in their thirties, or how they got into too much trouble when they were younger and you had to bail them out. When you are having these difficult discussions, you’ve got to separate out the old from the new as well as your worries about the future and keep it in the present.

Outside Help

While it might not always be the thing to do, it is not uncommon for financial professionals to be brought in to instigate and facilitate these conversations.

If you have the right person, it can be extremely helpful. Reed says he has to be comfortable doing uncomfortable things.

“Am I family counselor? No,” he says, “But my job as an advisor, depending on how they bring me in, is to be a catalyst.”

Reed recalled a recent case in which a client who has nine kids, four of whom he works with, asked him to reach out to his another son who was not a client.

“I need you to speak to him,” Reed recalls. “I heard from [someone] that she thinks that there are some marital problems, can you give him a call, and I just want to make sure that he is OK."

Quick Fixes

Whether it is you or your financial advisor, who is doing the talking, Reed says there are key items to look for when you’re worried about an aging parent.

The absence of a will or trust are some of the more common problems with older adults,” he says, “either that or they are twenty years old.” Long-term care insurance is also critical.

Many times, people in their seventies and eighties are afraid that they are going to outlive their money and they put all their money in the bank in CDs.

“I’m not suggesting that we rip everything out, you have to have liquidity, but CDs are not paying enough after taxes and inflation,” Reed says.

In these cases, he recommends a variable annuity that has two distinct accounts called Retirement Cornerstone.

“I can still have them invested in equity, but I have another sleeve which guarantees them income regardless of what happens in the equity portfolio.”

Gurney says “people have a difficult time perceiving themselves as others perceive them. They might think I still manage my money well. I can take care of myself. Losing control of one’s ability to take care of oneself is so threatening to our sense of ourselves, that we deny and distort reality to keep that image in place. It needs to be handled very carefully."

Still trying to remember what your own parents said to you about the birds and bees? It may work because you likely had some sort of embarrassing talk. On the other hand, the money conversation probably never happened.

Follow these steps sooner rather than later, and you can spend quality time with your loved ones--rather than helping them deal with an unexpected and unnecessary financial crisis.