Once upon a time, the typical American family consisted of a husband who was the family’s primary breadwinner, a stay-at-home wife and their 2.5 children. Traditional life insurance policies were developed during this bygone era and based on this common family dynamic to protect the wife and children in the event of the husband’s untimely death. It was pretty simple. However, times have changed.
“Modern Family,” the TV show, has replaced “Leave it to Beaver,” and that trend extends beyond the prime-time television schedule. For starters, nuclear families with their own children now make up a mere 20 percent of the U.S. population, and only 17 percent of U.S. households include a husband who works and a wife who does not.
Women are working to support their families. Men are increasingly providing primary care for children. Unmarried parents of either gender are often filling both roles simultaneously.
The traditional dynamic is no longer necessarily the norm, and these scenarios are just the tip of the iceberg. Consider blended families; multi-generational households; unmarried couples with children; lesbian, gay, bisexual and transgender couples and families; and so on. Planning for a family’s future financial security is no longer a simple matter.
I recently met a stranger on an airplane. She was a talker, and I’m never one to pass on a good conversation. As a financial advisor, I found her story fascinating. She explained to me that she had a successful career in the federal government and had recently retired. She was a single and divorced woman for many years but had recently remarried to a man who lived in a different state. Her new husband has two children who are adults but who still rely on him for financial assistance.
She was understandably confused by her own financial situation. She obviously needed a plan that would do more than replace the income of a family breadwinner.
I was amazed that she had never worked with an advisor. She asked if I could recommend a book she could read to better prepare herself for the financial challenges of retirement. I replied that I wasn’t aware of any books on planning for a retired career woman who remarried across state lines into a blended family. Her situation cried out for individualized, professional financial advice.
“We would never diagnose health issues by reading a book and caring for ourselves,” I told her. “Why would we want to handle our financial health without seeking the assistance of a professional?”
My airplane encounter provides a good example of a type of prospect who might not have existed years ago, and it illustrates several of the challenges and opportunities advisors face today.
We live in the information age. Whether it’s a self-help book, e-newsletter, website, or radio or television program, consumers have more access to financial advice than ever. At the same time, most people, like my airplane friend, have financial situations that are more complex than in the past. A book or website simply cannot give them pertinent, individualized advice. This presents unprecedented opportunities for advisors.