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December 30, 2015 at 10:50 AM
As family structures in the U.S. have changed significantly over recent decades, so too have the financial concerns of new family configurations.
Only 19.6% of U.S. households today represent married heterosexual couples with children, compared to 40.3% of such traditional families in 1970, according to a new report from Allianz.
Today’s modern family structures create unique pressures that require new approaches to serving each family’s own financial needs.
In a white paper released this week, Allianz shows how financial professionals may better serve the unique financial needs of not only traditional families, but also six different types of modern families.
Though different in many ways, all these family groups share some needs in common:
- 51% believed they were on track to achieve their financial goals
- 76% worried about running out of money in retirement
- 43% had worked with a financial professional
- In general, modern families reported feeling less financially secure than traditional families.
The white paper is based on findings from Allianz’s LoveFamilyMoney study, conducted online in January 2014 with some 4,500 respondents ages 35 to 65 with a household income of $50,000 or more.
Traditional Families
The study defined the traditional family as two opposite-sex adults with at least one child under age 21 living in the household.
The study found that only 33% of this family type was likely to be working with an advisor on financial strategies and retirement income planning.
At the same time, 61% of respondents in this category were likely to consider a financial advisor’s services worth the expense.
Families in this group were relatively well off and, according to the paper, may provide an opportunity to tell other similarly situated couples about their experience working with an advisor.
This is not a given, however. Recent research showed that affluent investors did not necessarily refer their service providers to their friends and family, making it incumbent on the advisor to make this happened more often.
Multigenerational Families
Multigenerational families have three or more generations living in the same household, including children and a parent or grandparent.
Respondents in this configuration reported having not enough money or too much debt. An advisor could help them form a basic financial strategy to identify short- and long-term goals.
Saving for education and unexpected expenses is very important to this group, the study found.
These families may need help balancing conflicting financial priorities. As well, because of more complex caregiving responsibilities, they may welcome having someone else help them take control of their finances.
Single-Parent Families
Single-parent families comprise one unmarried adult with at least one child under age 18 living in the household the majority of the time, and no other adults in residence.
According to the study, 45% of respondents in this category said college funding assistance would motivate them to develop and execute a long-term financial strategy.
The vast majority of single-parent respondents reported that they had access to a retirement plan at work. A financial professional could help them find other ways to save for retirement.
More than half of these families said they wanted to become debt free, and so may need help developing a financial strategy that balances all of the household needs.
Life insurance is critical to single-parent families. An advisor can offer to conduct a policy review to help determine whether their current coverage is adequate.
