UHNW families aren't talking as much as they want

Ultra-high-net-worth (UHNW) clients know they should be talking with their families about generational transitions around wealth and planning. Yet parents are often hesitant to get the conversation started with their families. From legal and financial complexities to worries about the impact wealth will have on the next generation or challenging family dynamics, there are many factors that may keep clients from starting the conversation, even when they want to.

For advisory teams, these hesitations are an opportunity to help. By developing a better understanding of what keeps UHNW families from talking, you can build a strategy for facilitating generational planning conversations. Doing so will create new value for clients by helping them do something that matters to their families. It will also set you up to build relationships with spouses and the next generation that can drive organic growth.

This article shares research insights from the Fidelity Center for Family Engagement that shed light on the conversational and planning dynamics in UHNW families. It also offers specific “how” strategies you can use to create new value for UHNW families by helping them work through their hesitancies and get started talking about generational transitions.

Research offers insights about later-in-life planning in UHNW families

The Generations Project^SM recently published findings from our Later-in-Life Conversations Study that explored how mass-affluent and high-net-worth (MA-HNW) individuals talk with their spouse/partner and adult children about later-in-life planning topics. The study drew on a random sample of 1,539 participants (784 baby boomers and 755 Generation Xers and millennials—largely the children of baby boomers). We presented participants with a list of 14 later-in-life topics and asked them to identify which ones were most relevant to them. We then asked them to indicate how willing they were to talk about the topics and how actively they were talking about them.

With that data in hand, we wanted to understand how the conversational dynamics in UHNW families may be similar to or different from MA-HNW families. So we launched a smaller, more personal benchmarking study of families with an average of around $20 million in investable assets. This study had 106 baby boomers—including 39 couples—who took the later-in-life conversations survey and participated in a focus group.

Here are 10 findings from our research that offer insights about later-in-life planning in UHNW families and point to ways their approach may differ from MA-HNW families.¹

1. Wealth transfer is the most relevant topic for UHNW baby boomers, yet it ranks 10th in relevance for their MA-HNW peers. This large gap reinforces the relationship between greater wealth and a focus on wealth transfer.
2. Although wealth transfer is the most relevant topic for UHNW parents, it is also one of the topics they are most unwilling to talk with their children about.
3. Legal and financial planning is highly relevant to both populations (second most relevant to UHNW baby boomers and first overall for MA-HNW). But the importance of the topic doesn’t translate into more conversations or confidence for either group.
4. Parents in the UHNW study are talking less to their children about later-in-life topics compared with MA-HNW (23% of UHNW parents are not actively talking about any of the topics, compared with only 12% of MA-HNW).
5. UHNW respondents are actively talking to their spouses/partners about their most relevant topics—significantly more so than MA-HNW participants (59%, compared with 33%).
6. UHNW baby boomers have a significantly higher focus on their future state of living compared with the MA-HNW group. Three topics in their top five most relevant (decision-making and change of control, dependence and dependent living, and roles and responsibilities of family members) do not appear in the top five for MA-HNW baby boomers.
7. Planning for health and care decisions is the second-lowest-ranked topic of relevance for UHNW baby boomers but the third-highest-ranked topic for MA-HNW baby boomers, indicating a different financial focus around health and care needs.
8. UHNW respondents have completed more functional planning, but their level of planning doesn’t increase their confidence in having a seamless transition (65% have confidence, compared with 69% of MA-HNW).
9. A significantly higher number of UHNW baby boomers are sure they have named a primary beneficiary (75%, compared with 64% of MA-HNW). At the same time, fewer are sure they have provided the necessary information to their beneficiaries (47%, compared with 56%).
10. There are also several findings about couples that we want to explore further:
    • UHNW couples are not always aligned on what it means to be the “primary decision-maker” versus having “shared decision-making” (over 50% of matched couples gave different answers).
    • Couples have different definitions of what “actively talking” means.
    • Couples have different views on whether they are actively talking about later-in-life topics (more than three-quarters of couples disagree on three or more topics).

UHNW parents have distinct hesitancies to talking about wealth

When we compare our UHNW focus group conversations with our MA-HNW qualitative research interviews, we can confidently say that the UHNW baby boomers have a more intense interest in later-in-life family and wealth transition topics. But we would not say that their higher level of interest overcomes their hesitancies to talk about these topics in their families.

Unlike in the MA-HNW interviews, UHNW participants did not push back on or question the importance of talking about later-in-life topics right now. It seemed self-evident to them. And yet, while they acknowledged the need and importance, there was a significant “Yes…But” sentiment toward having family conversations. We might describe this mindset as a “thoughtful hesitancy,” mostly due to the amount of wealth they have.

Here’s what “Yes…But” sounded like as we listened: “YES, we should talk to our children about our planning. BUT … I don’t want to show them my balance sheet … I don’t want to disincentivize them … I am worried about conflict around fairness … I don’t want to burden them with our planning … I don’t know what to do about the in-laws … I’m not sure my spouse and I agree.” The continuum of “buts” ranges from fears rooted in family history to difficult family dynamics and complex planning situations that feel overwhelming.

UHNW parents’ reluctance to talk to their children can be a significant barrier to important family conversations about generational transitions. As an advisor, you have an opportunity to add enormous value by helping your UHNW clients expand their thinking about generational wealth conversations.

How to help UHNW families unlock generational conversations

One way to help UHNW parents start generational wealth conversations is to support them in shifting from “Yes…But” to “Yes … And.”

“Yes ... And” is a way to acknowledge complexities while also emphasizing why talking matters. It genuinely validates concerns and then offers options for how to proceed. Rather than being shut down by hesitancies, "Yes ... And" sets you and your clients up to think creatively about conversations they COULD be having as a family.

Here are "Yes ... And" statements you can share with your clients to help them address their hesitations. In each case, you can also ask reflective questions to extend their thinking.

Break down complexity by teasing conversations into smaller parts

UHNW families are working through enormous legal and financial complexities with their wealth and planning. They are also navigating significant emotional and relational complexity around a range of values, perspectives, relationships, histories, and wishes for the future. And when they try to tackle too many issues at once, it can overwhelm them and shut the conversation down.

As their advisor, you can help them break the complexity into manageable parts. Ask your clients about individual topics they would like to talk about with their spouses and children. Coach them to invite their family members to identify topics they would like to talk about. And keep track of a continuing agenda that will build conversational momentum and confidence through time.

How to take action on the research insights

Insights and hints for engaging with UHNW baby boomer parents and couples.

Parents:

• They are more focused on wealth transfer—don’t assume that means they are talking about it with their children.
• They have a stronger expressed fear of demotivating children—push through the resistors to help them create more transparency.
• They talk less with their children about their overall later-in-life experience—facilitate later-in-life conversations beyond wealth transfer.
• They have a more intentional “transitions” mindset—leverage this mindset to foster more generational engagement.

Couples:

• They aren’t fully aligned on their views and intentions around planning—lean into the conversations couples are having and don’t assume they are aligned.
• They are doing more planning but feel less confidence in their plans—help them simplify complexity rather than trying to solve every problem they can think of.
• They have a constant sense they have not done enough planning—take an incremental approach that addresses point-in-time concerns.