The role for advisers in navigating complex family discussions

Less than a quarter of Australians have discussed estate and retirement planning with their family, according to Findex. 

According to the firm’s research of over 1,000 people, short-term savings and budgeting dominated conversations with fewer tackling the topic of complex wealth planning. 

Some 65 per cent discussed savings and budgeting, and 52 per cent discussed the cost of living while around a third each discussed insurance, debt, superannuation and tax. 

But when it came to matters such as retirement plans and estate planning, the number was far lower at 24 per cent and 15 per cent respectively. 

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Financial topics discussed with family

Source: Findex, October 2023

Even among those Baby Boomers who are the generation closest to approaching retirement, the top discussion was superannuation at 39 per cent followed by insurance at 35 per cent.

Findex said the lack of engagement on these topics mean families could be missing out on opportunities around intergenerational wealth transfer and asset preservation, presenting an opportunity for financial advisers. 

Over half of people said they felt uncomfortable discussing their finances with family, having barriers such as differences of opinion, fear of being judged, and conflict concerns. 

However, 40 per cent said they believed being able to discuss finance with their family would help them gain a better understanding of how to budget and save more efficiently, and a further 39 per cent said they believed it could help them build their financial literacy. 

This perceived benefit increased as people’s wealth increased, with 74 per cent of people earning $150,000 or more saying they thought it would have a positive impact on them compared to 40 per cent of people earning less than $50,000. 

Almost a quarter said being able to share professional advice they had received with their family would be a prompt for them to start a discussion. 

But only 19 per cent said they currently receive advice, and another 19 per cent said they had not received it but intend to do so. 

Those who had engaged with an adviser were more likely to engage in and be more comfortable in conversation with family about finance, discuss their retirement and estate planning needs, gain a better understanding of their finances and expect a smoother transfer of wealth. 

Findex said: “Professional financial advice not only shapes financial discussions within families but also acts as a catalyst for enhanced financial literacy. When asked about the potential impact of guidance from a professional financial adviser, one in five say receiving advice on how to involve family members in conversations alongside having a trusted adviser facilitate and lead these discussions, would encourage them to engage in regular financial dialogue.

“Expert guidance is more than just a tool for managing finances, it’s a conduit for nurturing informed dialogue and empowering family members to make well-informed financial decisions.”

Last month, research by Praemium found 39 per cent of high-net-worth investors said inheritance and estate planning were unmet advice needs for them, as well as retirement planning and intergenerational advice.