Money and Adult Kids: 1) The Great Wealth Transfer: How Adult Kids Can Start Talking To Their Parents About It; 2) Millenials Feel Pressure To Ditch The Wallet In Favour Of Digital Wallets
1) The Great Wealth Transfer: How Adult Kids Can Start Talking To Their Parents About It
Courtesy of Barrie360.com and Canadian PressPublished: Feb 6th, 2024
By Nina Dragicevic
A massive financial shift is set to take place in the coming years as baby boomers pass their assets down to the millennial and Gen Z cohorts. But many parents aren’t preparing their adult children to handle that wealth.
CPA Canada says it’s expected to be the largest generational transfer of wealth in Canadian history, with younger Canadians expected to receive a combined $1 trillion in the next few years alone.
But talking about money is still taboo for many families, said Thuy Lam, a certified financial planner with Objective Financial Partners, a fee-only firm in Toronto.
“The reality is a majority of parents do not sit down with their kids. Not even a third of parents will sit down with their kids,” Lam said.
Even after being in the finance industry for more than 20 years, she said she’s still shocked when a family has had an open discussion with their kids because it’s so rare. Having this discussion is always something she encourages, though.
The unfortunate irony of this silence is a major fear among parents is that their children lack financial literacy — they worry their kids don’t know how to manage money, Lam said. But it’s hard to learn a forbidden topic, especially if parents have specific wishes for their wealth. Lack of communication, Lam noted, can create family chaos around inheritances.
There’s extra sensitivity about inheritance because it involves death, said Tracey McLennan, director of the client consultation group for Edward Jones Canada.
“We don’t like to talk about mortality either,” she pointed out. “So now we’re pairing up money and mortality.”
However, parents are talking to their advisers. And it turns out they have a lot to say.
The top concern for this asset-rich generation is the financial literacy of their children, Lam said. The second biggest concern is their children’s spouses.
“Although the marriage amongst their kids and spouses are currently going well, you know, that’s sometimes a concern,” Lam said. “They want to be able to protect any inheritances from potential breakdown.”
McLennan sees that too.
“‘We love our daughters- and sons-in-law, but what if the relationship doesn’t last?’” she said parents often ask.
“I think that we also hear parents are concerned that they don’t want to give the wealth too early, or in a way that will affect their children’s life or relationships.”
The older generation has worked hard for their money, and worked hard to save it, McLennan said. Her clientele tells her they’re concerned about their legacy being wasted — they want the inheritance to have meaning.
“They want to make sure that they are going to impact the next generation in an important way, and it not be wasted,” McLennan said. “Or if there’s enough funds, that it’s actually available for even more than one generation.”
Sometimes parents’ vision for the wealth can be very specific, she adds: paying for the grandchildren’s education or used as extra money for vacations their kids couldn’t otherwise afford.
They might also want security for heirs that are self-employed or work for the family business, or perhaps have a disability or addiction.
Adult children can sometimes get the conversation started if their parents have not. Sometimes Lam finds herself coaching the younger generation on how to open a dialogue: start by asking about the executor role.
“It’s in the positioning, right?” Lam said. “And it’s very genuine, because the estate plan has not only to do with the distribution of the assets, but also the executor role. Who’s going to take on certain roles of settling the estate?”
It might be a year between a parent’s death and the settlement date, she adds. “Imagine trying to learn that role and learn how to manage a big amount of money within a year’s time — that’s not a very long timeframe.”
As a conversation starter, McLennan recommends offering assistance for what may be a stressful time for parents. Working with advisers, she adds, can help bridge the gap between family members by adding a mediator.
“Everything from making sure that we share instructions about documents, wills, powers of attorney to making sure that they understand what their parents’ wishes are.”
Adult children can start their own financial education by reading news, listening to reputable podcasts, and seeking expert advice, Lam said. Long before an estate lands in their lap, they can gain confidence about investing, debt management, and financial health overall.
This confidence, Lam said, can help with some of the anxiety heirs experience when suddenly managing large amounts of money.
McLennan agrees — adult children recognize the responsibility of the gift they’ve been given, which may impact the rest of the family, a business and a community.
“There’s a bit of fear, you know: ‘What if I make the wrong decision? What if I invest and markets go down?’” McLennan said.
“I think there’s a great deal of worry, sometimes, about that role to steward. Most kids want to fulfil their parents’ wishes. And they want to make sure they do it well.”
2) Millenials Feel Pressure To Ditch The Wallet In Favour Of Digital Wallets
WHAT’S TRENDING WITH MJ
Courtesy of Barrie360.com – MJ BradfordPublished: Feb 6th, 2024
With your credit and debit cards now available on your phone, more and more people are saying “bye-bye” to their wallets.
Gen Z has been going without the clunky items for a while now, making millennials think they have to ditch them, too.
The younger generation carries everything in their digital wallet, including a digital ID, and thinks a wallet is a fashion no-no.
One woman on TikTok genuinely asked, “How do you have your ID in your digital wallet?” Is this a thing? Did I miss the memo?”
A February 2024 report found that 79% of Generation Z consumers use digital wallets.
Per the New York Post, the study states, “Digital wallets, such as Apple Pay, Google Pay and PayPal, provide convenient and secure ways to complete online purchases. These wallets remove the cumbersome process of entering credit or debit card details at checkout.”
The idea of ditching the George Costanza Wallet is tempting, but the old-school side of me would feel so naked and vulnerable without it.https://giphy.com/embed/X2xRGTElqdfry
One thing to remember for the youngest digital wallet users is that you must be 18 to access some of your payment methods, so if your digital ID says you’re younger than that, you’ll be locked out.
Patricia is the Business Mentor and owner of Grow Vantage and a Past President of the Barrie Chamber of Commerce. She applies over 30 years of business experience (from start-up to corporate) to mentor entrepreneurs. Since 2011, she has held over 6,500 coaching and training sessions in-person and online. Through Ask For Directions Training, her entrepreneurial training program (and parent company Grow Vantage), and as a business coach, she works with start-ups who are new (or who have lost traction) to design, launch and grow their businesses. Along with 20 other expert instructors she teaches strategies in marketing, sales, communications, and finance, as well as practical techniques to increase productivity, and manage their businesses. In other words, everything entrepreneurs need to learn to grow and run their businesses successfully, and avoid the costly mistakes they can't even see coming - that lead to delays in growth and getting stuck.
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