Thursday, January 27, 2022

All in the Family



By Darcie Guerin

B20-CBN-4-17-15-4Question: I’m a bit uneasy with my children and grandchildren’s abilities to manage the family finances after I’m gone. What tips or suggestions might you have?


Answer: Not knowing your family, but based on studies by Boston College’s Center for Retirement Research, your concern is justified. The unfortunate reality is that 70 percent of family wealth disappears when passed to the next generation. All too frequently, the first generation builds the wealth, the second expands it and the third generation loses it, having to start over. With an estimated $30 Trillion (yes, that’s with a “T”) transferring from Baby- Boomers to Millennials over the next thirty years, it’s worth discussing ways to make this transition more successful.


Nothing Changes If Nothing Changes

The Center for Disease Control and Prevention estimates the average life expectancy in the United States at 78.8 years. Three generations would therefore span 236.4 years. As seen in the quote, Professor Tyler states that the average lifespan of world’s greatest civilizations, including Rome, was roughly 200 years. Is this a coincidence? I think not.

An observation made by History Professor Alexander Tyler of the University of Edinborough, Scotland in 1787:

“The average age of the world’s greatest civilization from the beginning of history, has been about 200 years. These nations always progressed through the following sequence:


From bondage to spiritual faith;

From spiritual faith to great courage;

From courage to liberty;

From liberty to abundance;

From abundance to complacency;

From complacency to apathy;

From apathy to dependence;

From dependence back into bondage.”


Professor Tyler also said, “A democracy will continue to exist until voters discover they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits…every democracy will finally collapse due to loose fiscal policy, (which is) always followed by a dictatorship.”

So, how do we break this collective cycle and encourage subsequent generations to protect and increase both tangible and intangible wealth? There are a few logical concepts you can incorporate into your financial planning to address an orderly transition of assets and beliefs to successive generations.

Start Early

Children as young as five can learn the value of money. Teaching delayed gratification in exchange for long-term results prepares even the youngest for the future. For instance, on January 1 each year, our grandkids each receive $100 in a “special” account. This money can be used for anything, including discretionary items their parents (or grandparents) chose not to purchase. At the end of the year, any remaining account balance is matched and another $100 added. At nine, Averie is the oldest and she tends to be more focused as compared to seven- year-old Josh who’s a carefree, live-for-moment kind of guy. At the end of the first quarter of 2015, Averie has $96 versus Josh’s $54. It will be interesting to see how Josh reacts at year-end when Averie will likely receive matching funds and while Josh will not. The real test will be to see if Josh alters his behavior in the future. At these tender ages, there is no right or wrong.

This is just a way



to illustrate delayed gratification and the consequences of decisions before they’re out in the real world and the stakes are much higher.

If appropriate, share your financial successes and failures to illustrate resilience and perseverance. These conversations provide a sense of belonging and help build confidence while supporting each other’s goals and dreams. Future generations can learn from your experience and create their path for success. Financial decisions are based on both emotional and intellectual IQ. The capability to make optimal choices contributes to the erosion or preservation of financial capital over generations.

Build a Team and Communicate

Depending on family dynamics, you may want to introduce family members to the trusted financial planning team you’ve assembled. All too often, the first time we meet some client’s families is at a time of transition or loss. These team meetings are a time to discuss your intentions and goals while you’re here and able to explain them. Your advisors can help

facilitate these conversations. If you don’t want to disclose specific valuations, clearly communicate with advisors beforehand how much you’d like to share with your children.

The promise of sudden wealth has a way of stifling aspirations. Depending on communication and how the stage is set, a potential inheritance can become a crippling curse viewed as an entitlement to be squandered or viewed as a safety net and treasured gift. Proper planning, often using trusts can help keep Uncle Sam from becoming the biggest beneficiary and ensure that your wishes are followed in the years ahead.

Although the odds of sustaining wealth across generations are as low as 30 percent, less than 3 percent of this erosion is due to poor estate planning or bad investment returns. Family wealth typically evaporates because of poor communication and a breakdown in trust leaving heirs unprepared for “what’s next.”

Evolution depends on each generation having their own ideas on money and other matters, and they may not always agree. Embrace the opportunity to help connect the generations and shape your family’s future. If nothing else, family discussions provide incredible insight into each other’s values and temperaments. The dialogue may not always be harmonious, but if the good outweighs the bad, you’re off to a good start.

Money transfer conversations are opportunity to share family values and history. The true measure of wealth includes intellectual, emotional, and financial capital; it’s not just about today’s bottom line. Stay focused; invest and plan accordingly.


The opinions expressed are those of the writer, but not necessarily those of Raymond James and Associates, and subject to change at any time. Information contained in this report was received from sources believed to be reliable, but accuracy is not guaranteed.

“Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.”

This article provided by Darcie Guerin, CFP®, Vice President, Investments & Branch Manager of Raymond James & Associates, Inc. Member New York Stock Exchange/SIPC 606 Bald Eagle Dr. Suite 401, Marco Island, FL 34145. She may be reached at 239-389-1041, email Website:


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