To effectively plan for clients’ retirement, advisors are going to have to broach sensitive subjects around family finance.

That’s the message from a Bank of America Merrill Lynch study titled, “Family & Retirement: The Elephant in the Room,” which showed that many adults 50 and older with over $250,000 in investable assets were simply not discussing with their families – in many cases even their spouse - some of the most important financial planning concerns. More than half had not discussed issues such as a will or health directive with their children and nearly one-third of respondents over 50 had not had those discussions with their spouse.

“The old analogy that silence is golden has been shattered with this study,” David Tyrie, the head of retirement and personal wealth solutions at BofA Merrill Lynch, said. “It is a real problem.”

The survey, which was conducted in partnership with geriatric research firm Age Wave and polled 5,415 individuals between 25 and 88, examined the family-wide implications of retirement.

The main reason for avoiding discussions around wealth transfer or health care was avoiding family conflict, according to 24% of respondents. Another 19% said those matters were too uncomfortable to discuss. “People are avoiding these conversations because they’re afraid of what could come out,” Tyrie said.

But those who had conversations about financial planning with their adult children or spouse were twice as likely to say that they would be prepared in the event of a sudden family emergency. Advisors should consider it their responsibility to ask the right questions to encourage families to have those discussions in a safe and open forum, said Andy Sieg, head of global wealth and retirement solutions at BofA Merrill Lynch.

“The role of financial advisors, among other things, is to start this dialogue and help have a level of understanding across generations that advisors can use to make this a safe conversation,” Sieg said. “Where we see that happening with clients, it is paying enormous dividends in terms of confidence in the future.”

While the need for dialogue was not new, the oncoming generational wealth transfer and the additional complication surrounding retirement planning made it a higher priority, Sieg said.

“Historically, financial advisors wanted to ensure that they knew their client’s goals and tax status, and that’s still foundational,” Sieg said. “But we’re training and positioning our advisors to be asking very new and very different questions with clients.” Advisors at BofA Merrill Lynch are encouraged to ask clients questions about their family, health, work, and whether their children know what their plans are surrounding retirement and health care.   

Register or login for access to this item and much more

All On Wall Street content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access