Families Must Improve Wealth Conversations – Merrill Report

Amanda Cheesley Deputy Editor November 6, 2023

Families Must Improve Wealth Conversations – Merrill Report

The Merrill Center for Family Wealth has published a report this week on how families communicate about wealth. It outlines ways to improve conversations about money and relationships.

Nearly four in five wealthy families have had unplanned discussions about wealth, with 26 per cent later regretting it, according to a new study published by the Merrill Center for Family Wealth™, a part of Merrill Private Wealth Management.

The research found that 33 per cent of families have increased family conversations about wealth since the pandemic. However, many families dive in without a plan, process, or skills to make well-intended conversations productive. This can lead to unintended stress, potential family rifts and under-functioning heirs, the report shows.

The firm thinks that an all-at-once disclosure is often overwhelming for the upcoming generation. Instead of going from a total blackout of information to suddenly revealing a balance sheet and estate plans, it found it helpful to turn the lights up gradually, through a series of conversations over a period of years.

The survey feeds into the point, often heard by Family Wealth Report, that proactive conversations between family members are as crucial in avoiding damage to wealth as mistaken asset allocation. (The UHNW Institute in the US, with which FWR is an exclusive media partner, devotes much of its energy to the topic of family dynamics and such conversations. See its website here.) This news service has also interviewed firms that coach families on such topics, such as in this interview by Joe Reilly of Paul Edelman. One term that arises is the "social fitness" of families, a term covering families' abilities to handle challenges. We have spoken, for example, to Katie Jesionowski, chief marketing officer of Total Family Management, about this topic. The recent US television drama, Succession, also sparked reflections from this publication's editor.

“Carefully planned progressive disclosure is best when paired with actions that allow the beneficiary to practice wealth management on a small scale. For instance, small gifts can be made, accompanied by conversations about the purpose of the gift,” the firm said.

To have a better understanding of how families approach discussions about wealth and decisions around gifting money, distributing assets among heirs, managing shared assets, and preparing the rising generation to handle wealth, Merrill surveyed over 270 individuals from families with $50 million or more in assets. The report, entitled Pulling back the curtain: Wealthy families open up about money, relationships and decision-making, looked at how families are communicating about wealth with each other; their perceived levels of competency on key skills, and how they go about transferring and gifting wealth across generations. It also provides lessons and steps for families navigating the complexities of intergenerational wealth. 

“Our research pulls back the curtains on the intricacies of family wealth, a topic that still remains taboo in many circles,” said Valerie Galinskaya, head of the Merrill Center for Family Wealth and principal author of a report on the findings.

“When families learn to navigate wealth together, starting with an intentional plan and thoughtful conversations, they can do great things and thrive,” she added.

Gifts and distributions
Beyond looking at how families make decisions and communicate about wealth, the study explored practices for lifetime gifting and the distribution of estate assets.

It found that 83 per cent of families provide some sort of ongoing support for adult children or other heirs, including 39 per cent who provide recurring lifestyle support, such as paying living expenses and repaying debt or loans. 

It also shows that 56 per cent who make or plan to make financial gifts during their lifetime do so with an intent to share gifts equally among their children or other family recipients.  

Thirty-five per cent of those making lifetime gifts do so on a case-by-case basis, depending on the age and readiness of the recipient, their financial need, and how much time they have put into the family.

The Merrill Center for Family Wealth is a specialized group within Merrill Private Wealth Management, working with families to develop the skills and processes for more productive family wealth conversations and effective decision-making.


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