In our society, many families still consider talking about ‘money’ a taboo. In fact, various independent surveys have revealed that many families fight over transfer of wealth to next generation due to lack of effective communication about money.
Also, many parents do not educate their children about wealth, savings and investments. So it is important for you as an adviser to help them break the money silence at their home.
Speaking at the recent Cafemutual Confluence 2016, Mimi Parthasarathy, Founder of Sinhasi Consultants said, “Barring a few, Indian families still do not like to discuss about money with their family members. Advisors need to fill this gap.”
As a financial adviser, you could either encourage parents to teach their children about money or have a conversation with their children on financial planning.
A whitepaper by Raymond James on ‘The money talk that is worth having’ says, “Some parents feel that this conversation could prevent their kids from being financially independent or could make them count too heavily on them for their future inheritance. But typically the underlying problem is a reluctance to talk about money.”
What stops families from having money conversations is that they fear of the consequences of having that conversation.
Financial advisers suggest that you will have to talk more like a friend rather than a professional. This helps to break the barrier during such conversations.
Here are a few ways IFAs can bridge this gap:
- IFAs should create trust through communication. Sometimes your client may have the best intentions for their family but it ends up misunderstood and the motive is never met. As a financial advisor, you will have to be a mediator. Help your client communicate their wishes to their family without any hesitation. “We generally involve everyone in the family while discussing finance and while preparing a financial plan. This helps to avoid miscommunication within the family,” says Ritesh Sheth of Tejas Financial Consultancy.
- The whitepaper suggests advisers to ease into the subject. For instance, use a recent news article or a friend’s story as a way into the conversation and stress the practical nature of the conversation. Tell them that it is their plan and it is important to discuss how the whole family will be affected.
- Involve young adults or older teens during discussions. For kids between 16-21 years, parents start thinking about where to send their children to college and also budgeting the expenses. You can advise parents to start by involving their children to participate in household budgeting and talk about paying bills on time. For example, their conversations can be about insurance, utilities and their costs, the importance of saving for long-term goals like buying a house, setting up an emergency fund or saving for retirement.
Source: A few points have been selectively taken from Raymond James whitepaper , ‘The money talk that is worth having’ and ''Kid-friendly finance'
