Two older adults and a young adult (Photo: Thinkstock)

How can advisors continue to serve the same family, from one generation to the next?

It’s a question that many advisors face; the answer rests not only with them but with their clients’ family as well. According to a national survey of slightly more than 1,000 young millennials (ages 22 to 26) and members of Gen Z (ages 16 to 21) conducted by Wells Fargo Private Bank, only about half report that their parents work with a financial advisor or wealth manager, and 17% are unsure.

Moreover, just 22% of them have ever met that advisor, and only 3% meet with their family’s advisor regularly, even though the overwhelming majority of those who haven’t met their parents’ advisor (88%) believe that regular meetings would be valuable.

The survey focused on the children of parents whose net worth, excluding homes, ranged from $1 million to over $10 million with a median of $2.4 million, asking them about their attitudes towards family wealth, family values, philanthropy and financial literacy and how often they meet with other family members to discuss these issues.

The findings were somewhat surprising:

  • Nine in 10 of those surveyed say the most important thing they will inherit is their parents’ values, not their wealth, and 84% want to build on their family’s legacy
  • Just 1 in 3 report having a formal meeting to discuss finances and 90% said they don’t meet regularly on the topic, though 60% of them would find that valuable
  • Half of those who do meet regularly with their family on finances say there are ground rules for the discussion such as confidentiality and taking turns
  • While most support their family’s charitable giving, 40% say they want to have a stronger voice in their family’s philanthropy and slightly more (44%) don’t discern a specific giving strategy
  • 65% express confidence in their ability to manage the family wealth, but C is the highest grade they gave themselves for managing and minimizing taxes, investing in the stock market and protecting assets with insurance. (They graded themselves B, B+ or B- in handling everyday finances such as budgeting and tracking spending, saving, and managing credit and debt.)

The survey found that younger generations perceived differences between what they and what their parents value most. Their primary personal value: the importance of family, cited by 77%; their parents’: the importance of education (87%).

Younger generations also saw wide differences between how they and their parents value enjoying life in the moment (67% vs. 37%), making the world a better place (58% vs. 34%) and the importance of charity (51% vs. 33%).

Those differences could explain in part why 60% of Gen Z and millennials feel pressure to live up to their family’s standard of wealth and success.

Like all family differences and debates, communication is key for resolution.

“A successful transfer of wealth is never because parents did not communicate with younger generations,” says Christopher Pegg, senior of planning for the California and Nevada region of Wells Fargo Private Bank.

Families need “to know how to build a foundation for positive communication …  be more intentional, allowing each member to have a voice in the process,” says Katherine Dean, head of family dynamics for the bank.

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