Families like to discuss a variety of topics, but money usually isn’t one of them, because perspectives, attitudes and behaviors around spending and investing can vary greatly, particularly across generational lines.
Not having important financial conversations between older family members and future heirs could be detrimental and affect the transfer of wealth.
That’s because about 70 percent of estate transfers fail within one generation, due to evaporated wealth and disrupted family harmony, says researcher Roy Williams, who conducted a 20-year study on 3,250 high-net worth families that was showcased in the book, “Preparing Heirs: Five Steps to a Successful Transition of Family Wealth and Values.”
When Williams conducted the study, he and fellow researcher Vic Preisser initially thought taxes,
governance and preservation were the reason for the high failure rate of estate transfers. “Everyone focused on how to avoid the rags to riches to rags syndrome,” Williams says. “But really it was mostly a breakdown of trust and communication, or a lack of agreed upon mission.”
A Variety of Viewpoints
Each generation was raised under very different economic conditions shaped by profound world events, which can greatly affect perspectives and conversations about wealth, says David Stillman, co-founder of BridgeWorks, a company dedicated to training and consulting on generational issues in the workplace and the marketplace.
For example, traditionalists growing up during the Great Depression and World War II may be very conservative about their money and may not like to talk about it, Stillman says. Flash forward to Millennials, who until recently had grown up in the very affluent times of the 1980s and 1990s. Their Baby Boomer parents may have communicated about everything, which means Millennials expect financial discussions, Stillman says.
Those diverse viewpoints and generational differences could potentially lead families to make negative assumptions based on stereotypes that could undermine conversations: some senior citizens may watch every penny, middle agers may max out budgets between child-related costs and self interests, and the younger set may be focused on games, toys and good times.