Talk Money to Me author Jason Tartick joins The Big Money Show to discuss his new book, shedding light on the importance of discussing your finances with your partner.
Americans have historically been loathe to discuss financial matters among family members, but a recent study by Fidelity Investments found that attitudes toward the taboo topic of wealth are changing.
Fidelity’s State of Wealth Mobility study found that 56% of Americans did not discuss family finances with their parents when they were children. Of that group, 82% wish they had because they think it would have been helpful to have received a financial education at an earlier age.
It also found that Americans’ attitudes toward these talks are changing, with 83% of respondents saying it’s important to talk about money management with children and 67% of parents already talking to their children about family finances.
“Money and wealth is one of the topics that, notoriously, we just don’t like to talk about historically,” David Peterson, head of advanced wealth solutions at Fidelity Investments, told FOX Business. “Wealth is like a deeply personal experience, so in some ways, it’s not surprising that people have historically been uncomfortable talking about it.”
WHAT NET HAS TO BE RICH IN 2024? HERE’S WHAT AMERICANS THINK
Americans’ attitudes toward once-taboo financial talk are easing, Fidelity’s study found. (iStock / iStock)
“The study showed that people are starting to break that cycle of avoiding family discussions. And so clearly, if we connect that then with the transfer of wealth between generations, that’s kind of a generational change, and what we found is that more old people in general — they’re just not as comfortable talking about it,” Peterson said.
Peterson said many Americans have experienced the complications that can arise when a parent who hasn’t been as open about their finances begins to decline and family members have to step in to take care of their finances.
“When people start reaching the end of life and suddenly they can’t manage their finances or they no longer have the ability to make decisions about them, that’s where you start to see things go a little sideways because they haven’t shared with their families that what is their wealth, where is the wealth, what does it consist of”, he said. “And you can find yourself very quickly in a situation where, during a really emotional time of life, people are now worried about how do we actually manage mum and dad’s finances when they can no longer do it themselves?”
MYSTERIOUS $7 BILLION WEALTH TAX PAYMENT RAISES QUESTIONS ABOUT SOURCE OF FUNDS
Peterson suggested that families approach financial conversations as a process, rather than trying to take care of everything at once. (iStock)
He said it’s important for families to have documents including a health care representative or health care power of attorney to help navigate the health care system, as well as a living will with instructions for the individual’s hopes about it. A financial power of attorney that trusts someone to act on their behalf in financial matters is another key document.
Families should also consider other necessary end-of-life paperwork and designations, Peterson said. Brokerage accounts that can be jointly titled with rights of survivorship can be very easily transferred to the surviving owner, while beneficiary designations can also be included to transfer the accounts upon death to the beneficiary.
“You need a will, which will account for all the things that don’t really have a title on it or a beneficiary designation in it,” he added. “And then, in some cases, it can be beneficial to have a trust and put the assets in that trust so that they pass through, similar to an account with a beneficiary designation. The trust will then determine that who gets all those assets that are in the trust”.
BUFFETT TALK ABOUT MORTALITY AND PHILANTHROPY IN SUPRISE SHAREHOLDER LETTER
Fidelity’s study found that people with financial plans have more confidence in building and protecting their wealth. (iStock / iStock)
Peterson suggested that to get the ball rolling it can be helpful to do so with the understanding that it’s likely not a single conversation and more of a process to relieve some of the pressure and emotions surrounding those conversations.
“I think for some people, having a very strict itinerary of what you’re going to talk about works really well; other times it doesn’t, and my recommendation is not to go into the conversation thinking it’s going to be such. Kind of a conversation to have these are difficult conversations to have,” Peterson said. “Look, I’m in the business, and I remember talking to my father, who’s now deceased, and you’d think it would be easy for me, but it’s not, because these things are wrapped up in all kinds of things. emotions.”
Sharing some details about financial accounts and points of contact can also be a good first step, even if it doesn’t necessarily lead to full disclosures about the specifics of an elderly person’s wealth, he explained.
GET FOX BUSINESS IN ALBANIA by clicking HERE
“Given especially the older generations who are not so willing to necessarily disclose all the specifics of their wealth, what I often recommend is to at least share what it is, not necessarily the amount, but where it is; who are the main people to contact in case a family member needs to know more about it, and keep all of these things in one place that’s easy to find,” Peterson said.
“Maybe the first step is just to do a really robust inventory of what you have, a balance sheet, a statement of assets, a statement of net worth, whatever you want to call it — but just this list of things so that when someone should act on they at least know where to go,” he explained. “And that way, you protect this sensitivity about how much is in all these different accounts or banks or financial institutions.”
Regardless of the process individual households use to build their financial plans, the Fidelity study found that having a plan is a confidence booster. While about four in 10 Americans worry about losing their wealth, 78% with a financial plan said they are confident they have taken the right steps to build and protect their wealth, compared with 26% and 27%, respectively, of those. without plans.
