In our roles as advisors and portfolio managers, we are often making allocation and investment decisions based on expected returns. We use various inputs to make our decisions, considering clients’ ability and willingness to take risks, along with investment returns and overall allocation. Tailored strategies that align with individual goals and risk tolerance can lead to more effective portfolio management. However, making these decisions most effectively requires input and open communication from our clients.
We are fortunate to get to work with multi-generational clients, but experienced investment professionals will likely have witnessed both successful and challenging situations when clients rely on other family members for financial decisions. In successful cases, family members who have been included in financial conversations early on can much more seamlessly step in when the time comes. Conversely, when no one else has the knowledge or authority to make important decisions, or when families can’t agree, it can lead to significant difficulties and delays, which unfortunately can also directly impact performance.
Including family members in financial planning provides a clear direction of your wishes, reduces the chances of future familial financial battles that create uncertainty and helps to prevent missed investment opportunities. High net worth clients with complex investments are even more at risk if family members disagree on how to manage the investments. In our experience, including loved ones in at least some of the reviews and conversations with your financial advisor significantly outweighs any potentially awkward conversations. Doing so may help to:
- Build Trust Across Generations Working with multiple generations helps build a legacy of trust. When clients feel comfortable bringing family members into their advisor relationship, it helps to ensure continuity in financial planning, improved financial literacy for younger generations and a sense of shared goals.
- Understand the Full Picture Bringing family members up to speed on the assets that you own and how to get information on them provides continuity and ease in estate settlement issues.
- Facilitate Difficult Conversations Trusted advisors can play a key role in facilitating difficult conversations about finances and estate planning. By addressing these topics proactively, and in collaboration with your attorneys and CPAs, we have helped clients ensure that their wishes are respected and their loved ones are prepared.
- Ease the Burden Having an appropriate level of trust and familiarity already established between your advisor and designated family member(s) can provide more peace of mind during times of illness or decline, for both yourself and your family.
- Prevent Financial Vulnerability As clients age, it’s an ideal time to lay out expectations with all beneficiaries and set up any estate provisions like power of attorney. Transparency and proper documentation help prevent misunderstandings and resentment while also helping to protect loved ones from financial exploitation.
Involving loved ones in financial planning today can save much frustration and the cost of missed opportunities down the road. We have seen this approach not only build trust but also ensure that families are better prepared for any eventuality.