You could call it reciprocal personal finance mentoring
Since millennials (men and women age 22 to 37) are just getting started managing their money and launching their careers, many of their boomer parents are giving them financial advice. But here’s a twist: Some millennial kids are trying to help their parents get a better handle on money, arranging for their moms and dads to meet financial advisers.
In certain cases, the millennial is going to the adviser meeting with a parent. “A child might be coming in with a surviving parent after, maybe, a dad passed away,” said Annamaria Vitelli, director of wealth strategy for PNC Wealth Management.
Other times, the millennial wants parents to see a financial adviser so the child has clarity about which responsibilities may be expected of him or her in the future.
What Millennials Want to Know
“They want to find out: ‘Will I be their executor? Will, there be expectations of me to be a caregiver and help pay their bills?’” said Vitelli.
A 2017 Merrill Lynch/Age Wave study of family members who are “financial caregivers” found that 53 percent of the care recipients need full assistance with their finances. As Age Wave CEO Ken Dychtwald said, “The idea of being a financial coordinator is a little bit complicated. People are doing it honorably and with respect but without much guidance. They’re kind of winging it.”
Financial and estate planning topics are often considered taboo in families. But when they aren’t discussed, millennial children can find themselves with surprise responsibilities they haven’t prepared to undertake.
“Kids really do want to help when their parents need it. They just need to understand what will be asked of them,” said Vitelli.
Bringing In a Financial Adviser
A financial adviser can serve as an objective expert to get families talking about money matters.
“Some millennials say: ‘I know I need to start this conversation, so they ask us to do it or they ask for coaching on how to start the conversation,” said Vitelli. That can then lead to additional meetings with the parents and their estate lawyer, accountant or life insurance agent.
In certain cases, millennials wind up getting power of attorney for their parents, so they’ll have the authority to manage the finances if mom or dad becomes unable.
The millennial children sometimes want to meet with their parents and a financial adviser to help prevent their moms and dads from being elder fraud victims, perhaps due to cognitive impairment.
A recent law is known as The Senior Safe Act and a new rule from the Financial Industry Regulatory Authority (the financial services industry’s self-regulatory body) give advisers more legal protection when they take steps to prevent clients from being scammed.
How Boomer Parents React
How do the boomer parents react when their millennial kids try to help with their finances? Often, quite well.
“I see families coming closer together because they are all appreciative,” said Vitelli.
She recalled one daughter trying to find an adviser for her mom. “The daughter had a general concept of how the estate would be distributed, but didn’t have all the details,” said Vitelli. “As the relationship with an adviser progressed, the mom became more comfortable with her daughter there and then brought in her other daughter to understand the full picture.
When the millennial kids are involved in estate-planning discussions, they can help their parents make better decisions.
“The child might say: ‘I don’t need my mom to pass all her assets to me. Maybe she could give half to my children, so I don’t add to my tax liability,’” said Vitelli.
One reason millennials are increasingly apt to help their boomer parents take control of their finances: they’re learning about money and estate planning from the internet.
“The millennials come prepared with lots of pointed questions that get at the heart of the matter,” said Vitelli.