Many families dive in without a plan, process or skills to make well-intended conversations about wealth productive – leading to unintended stress, potential family rifts and under-functioning heirs. Image: Bank of America
Nearly four in five wealthy families have had unplanned discussions about wealth, with 26 percent later regretting it.
A new study published by the Merrill Center for Family Wealth, a part of Bank of America’s Merrill Private Wealth Management, also found that 33 percent of families increased family conversations about wealth since the COVID-19 pandemic. However, many families dive in without a plan, process or skills to make well-intended conversations productive – leading to unintended stress, potential family rifts and under-functioning heirs.
“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 the report, in the report.
“When families learn to navigate wealth together, starting with an intentional plan and thoughtful conversations, they can do great things and thrive,” she said.
Ms. Galinskaya coauthored the report with Phoebe Massey, vice president and business support manager in the Merrill Center for Family Wealth. The report is titled, Pulling back the curtain: Wealthy families open up about money, relationships and decision-making.
The Merrill Center for Family Wealth, a specialized group within Merrill Private Wealth Management, works with families to develop skillsets and processes for wealth conversations and decision-making.
Talk is not cheap
Merrill surveyed more than 270 individuals from families with $50 million or more in assets to better understand 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.
Per the survey findings:
- 78 percent of families who recently had conversations about family wealth said the discussion came up spontaneously
- 26 percent of those who have had these conversations said they regretted it after the fact
- 48 percent say that financial decision-making is shared among two or more generations
- 54 percent report that one of their biggest challenges when co-managing shared assets is limited governance, such as a lack of transparency or clarity about roles, responsibilities and how decisions are made, by whom
- Just 14 percent say that the technical complexity of co-managing shared assets is a top challenge, while the remaining 86 percent point to non-technical challenges like complex family dynamics and limited governance
Gift that keeps on giving?
Beyond looking at how families make decisions and communicate about wealth, the study also explored practices around lifetime gifting and the distribution of estate assets.
Per the survey:
- 83 percent of families provide some sort of ongoing support for adult children or other heirs, including 39 percent who provide recurring lifestyle support, such as payment of living expenses and repayment of debt or loans
- 56 percent 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
- 35 percent 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
Please click or tap here to download the Merrill Center for Family Wealth’s new report, Pulling back the curtain: Wealthy families open up about money, relationships and decision-making