The emotional connection we share with our parents means talking about money can be awkward or difficult. As retirement extends 20-30 years beyond the working age, this conversation has become a real source of distress. This week, I spoke with Gail Cowling, Matchbox’s Vice President for Financial Services, about how financial services providers could differentiate themselves on this issue. Some excerpts follow:
Tricia Juhn: I know from interviewing thousands of people from all walks of life that talking about money is stressful for most North Americans, but talking to our parents about their money is uniquely so. Two questions: First, why is it so hard for so many people to talk about money?
Gail Cowling: Money scares a lot of people. Money has all sorts of sub-text attached to it, so people are reluctant to talk about it, even with their loved ones. They’re afraid of being judged – or even discovering something they don’t like about their beloveds. If you ask a relationship counsellor what the most frequent elephant in the room is, they say “money.” If you ask divorce lawyers what the most frequent contributor to separation or divorce is, they’ll say “money.”
Juhn: That’s true. All the cops I know say that money is the number one reason for violent crime, too – way ahead of passion.
Cowling: Right. Then there’s fear of math. Money involves math. Most of it is basic arithmetic, but it still scares people who feel a little shaky about their numeracy. There’s a lot of people who dropped math as soon as they could.
Juhn: I definitely did. The second part of that question is: what is it about talking to our parents about their money that is even more stressful?
Cowling: Our parents grew up taking care of us and the family finances. When we get older and the roles begin to reverse, it can be hard to stand up to someone you always looked up to and talk about things like estates, wills and even day-to-day finances. The implication is that our parent(s) are going to die. While intellectually we all know this (and so do they) it’s pretty hard to confront someone with their own mortality in order to have a conversation about money.
As we get older, we make our own choices about how we want to manage money. Sometimes we reject what we learned from our parents, which can lead to disagreement. In some families, one spouse or the other is “in charge” of the money. So it’s not just intergenerational, sometimes it’s intragenerational.
Families have habits around handling conflict – sometimes the most preferred way is to avoid it. And that can lead to difficulties.
Juhn: I really think “financial communication” needs to be its own specialty. What are some of the major issues that adult children face with their aging parents’ financial lives?
Cowling: As people age there’s a lot of things they lose control of: vision, hearing, mobility. That can mean spending hours trying to balance a checkbook when it used to take them a few minutes. Prying these functions from a parent’s grasp is a delicate dance. In cases of dementia, beyond the naturally diminishing capacities of old age, paranoia can make it hard for the adult child to act on their behalf even with power of attorney.
Juhn: Where does the adult child need the most help?
Cowling: Setting up opportunities and coaching for clear communication. Setting up a series of dates to talk about things in small chunks, rather than as one enormous exercise. The generations need to talk about: Where are things at now, the issues and gaps, the possibilities down the road, and what groundwork needs to be laid out to deal with the inevitable.
And then there’s the planning for our own aging. In my grandfathers’ generation, men lived on average about 5-7 years after they retired. My dad’s generation was and is living well into their 80’s – retirement + 20 years. My generation’s life expectancy is even greater so we should be planning for 30 years of retirement.
At the same time, though, more and more, parents are partially supporting their adult children in an increasingly expensive society with fewer secure and lucrative jobs. This puts people in a really difficult bind. They go into debt to educate their young, who then cannot get a return on that investment, so parents feel obligated to finance their “failure to launch” kids.
Juhn: What about generational differences? What are some patterns or trends that those of us in the financial services business should know to create better ways to support adult children and their parents?
Cowling: Fear of investing can be rife among “the greatest generation” because they recall the privations of the Dirty Thirties, but their Boomer children came into adulthood during a time of growing affluence. Gen X grew up with the spread of consumer credit. Millennials watched their parents lose their jobs, maybe their homes, in 2008. These experiences color the way we approach our elders’ finances and often the value systems clash.
In generations past, aging parents could rely upon their children to house them in their old age, and children left home as soon as they could, long before 25. Boomerang children and adult children are not leaving home till their 30s and even 40s, while their parents pay for the housing and care of another set of parents, creating the proverbial sandwich generation. We need financial services innovators to face up to these mass realities, and figure out solutions beyond “make more money.” How will these people ever afford their own old age when they are supporting the generation before and after them?
Juhn: So to close: In designing solutions to help aging parents and their adult children, what are some areas that financial services providers need to know?
Cowling: The best thing that a financial institution or advisor can do is sit down with both generations together and listen. Validating both points of view is important to building trust and encouraging both generations to start from a place of love and wanting the best for each other. Communication skills are important.
Another thing that FIs might consider is offering courses, either virtually or in person for the elderly, for families to learn about money and planning together; even a workbook or apps with questions that need to be asked and answered.
Finally, I think we need products that realistically create income for 20-30 years after retirement age, based on the changing realities of the labor market – fewer good jobs, shorter working span. This is, I think, the biggest challenge, but we should put our big brains to work on it for all our sakes.
Juhn: Thank you, Gail.
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