In recent years, many of the topics that families avoided have become common parlance in homes.
I remember a movie from the 1980s called “St. Elmo’s Fire.” In one scene, one of the characters decided it would be appropriate to only whisper certain words at a party that she didn’t consider “dinner-table material.” They were topics like “drugs” or “cancer” or “prison.”
Since that time, we have all become more adept at talking about those kinds of topics, and others that were formerly considered off-limits. But they haven’t all disappeared. Maybe the biggest taboo — the one many of us still shudder about discussing — remains in place.
It’s the money.
Discussing money and wealth has historically been considered “taboo” (or at least in questionable taste) in polite society. Rich families didn’t discuss how much they had in the bank, this was a conversation for other people.
As such, it became very common for wealthy families to avoid any conversations regarding financial status, which left their children at a significant disadvantage when maintaining a family’s legacy, or even having a solid understanding of money.
In my role as a financial adviser for families, I often find that the biggest hurdle they face is getting to a place where discussing money is something they feel comfortable doing.
Admittedly, these can often be tricky conversations. In many cases, they deal with other side issues that can be fraught with high emotion. Things like death and dying, poor health, bad marriages, questionable decision-making can all arise as part of these conversations.
However, I have also found that once families agree to go down this road, they can find themselves in a better, more honest place with each other.
Having these conversations in a time before an emotional moment happens — think the death of a beloved grandparent — can be one less thing to deal with during those times of sadness.
Also, and perhaps most important, these discussions and this process can make our relatives know that their heirs are clear about their wants and have a real view into what they want their legacies to be.
Here are a few thoughts that I share with clients when we are beginning to consider some of these discussions:
- Know the basics: Fundamentals of financial education should be both the hard skills of financial education, such as building a budget and understanding a balance sheet; and learning the “soft” skills of finance, why we’ve made certain financial decisions, what our financial decisions say about our values, etc.
- Know yourself: Not everyone is interested or naturally adept at picking up financial terms and concepts, so tackling the technical side should be built over time. Much like building a house, you need to start with the foundation, made sure it is reinforced, and move on up once a sturdy base has been established.
- Learn by doing: Concepts stick more often when they are applied and not taught in the abstract. Rather than teaching about budgeting, have children create a budget by charting their expenses for one week and categorizing these expenses into “wants” and “needs.” Then have them back into the income they will need to live. To understand how the stock market works, have your child pick a stock, or if you have the financial means, give your child the ability to invest a small amount. Show them how to research a stock and let them experience the ups and down of the market. These exercises can also help give parents more insight into how their children will act when larger dollar figures are available in the future.
- ‘Trust’ yourselves: If trusts are part of your family’s financial picture, consider using your adviser to help educate your children on the important roles, and key provisions, within a trust. This can be taught without revealing financials. To the extent that you feel comfortable giving your children a role in a trust, such a co-trustee, this will help give them ownership and responsibility, while also providing them with a safety net of a co-trustee. Introducing children to your family’s key advisers is itself a financial lesson and can help teach them about wealth management, what they do, and what questions to ask.
- Words and actions matter: Financial behavioral lessons are being taught every day, from you, your family members, your children’s peers all the time through actions and comments. So being intentional about what you communicate is important. Also, reflecting on whether your words and actions are aligning with your values will be a key factor if you want these lessons to stick.
- Giving it away: Lastly, if philanthropy is a part of your family, it can be used as a vehicle to teach both hard and soft financial lessons. It can be used to research financial impacts while simultaneously creating a forum to discuss your family’s values.
This process has multiple steps and takes some thinking and planning to do it right.
But, in removing this last great taboo with your advisers, with your heirs, and with each other, we can all find ourselves in a happier, more honest place when crafting our own legacies.
Marguerite Weese is the Chief Operating Officer of Wilmington Trust’s Emerald Family Office & Advisory and the national director of its Family Legacy Strategies practice.
This article is for general information only and is not intended as an offer or solicitation for the sale of any financial product, service, or other professional advice. Wilmington Trust does not provide tax, legal or accounting advice. Professional advice always requires consideration of individual circumstances. Wilmington Trust is a registered service mark used in connection with various fiduciary and nonfiduciary services offered by certain subsidiaries of M&T Bank Corporation. © 2023 M&T Bank and its affiliates and subsidiaries. All Rights Reserved.