According to a recent study by Merrill (Bank of America), family discussions about money and, more specifically, about the management and distribution of wealth, can “lead to regrets.” That is why these topics, in the family, are usually taboo.
Was it really necessary to do a study to find out? Merrill disagrees with this observation. The Merrill Center of Family Wealth just released a guide to “productive” family conversations about money.
Let us remember at the outset that the study, carried out by a wealth management bank like Merrill, refers to rich and even super-rich families (net worth more than $50 million). Furthermore, many aspects of the study can only be clearly understood in relation to American inheritance rules, which are clearly different from those applied in France. However, we will undoubtedly easily agree that, whatever the level of wealth, family discussions about money usually end badly, knowing that they have taken place increasingly frequently (+31%) since the pandemic.
Most of the time, these conversations arise spontaneously (78% of cases), therefore without preparation and, in a context where roles are rarely clarified as to who could or should do what, they quickly lead to blockages.
Inaction and paralysis
However, the study emphasizes that families should learn to manage their wealth together, which starts with thoughtful conversations. Because the taboos that weigh on these issues are sources of inaction and paralysis that can be very harmful for families – but also, we will undoubtedly add, for the banks, which in this way fail to make their management and investment offers. Certainly, but Merrill’s attitude, in this case, is not limited to that.
Eliminating taboos regarding money is a very current trend. The uninhibited and lucid management of one’s finances is the subject of countless advice on social networks (more or less eccentric, even dangerous, in fact), aimed especially at women and the younger generations. Some have even compared this trend to the sexual liberation of the 1960s.
Merrill’s study, aptly titled “Pulling Back the Curtain,” aims to offer a practical guide to an uninhibited family approach to heritage issues.
There are many reasons why figures regarding wealth within the family should not be produced. In wealthy families there is a particular fear that, upon discovering that they are too spoiled, the children will lose all ambition. In fact, it is better to first talk about the objectives and values associated with an estate, before moving on to the figures, says Merrill; which advocates a gradual approach through a series of conversations.
An approach that is not limited to heritage
We will let you discover other tips given by the study to highlight here especially the novelty of this approach: a bank offers to intervene in family conversations to facilitate them and make them more fruitful. Thus, to better identify the values that can be attributed to an asset and discuss them, a “Value Card Facilitation Guide” is presented.
In fact, that role is not new in the field of wealth management, particularly in family offices. But by standardizing it in the form of different tools, Merrill appears to be preparing to extend it to a much larger scale. In fact, we can imagine these tools being introduced into the Life Plan personal finance management application, already focused on defining life goals, that Bank of America, one of the four major American retail banks, offers to all its customers.
It’s because these questions don’t concern only the rich! Although this approach is not limited to wealth management or wealth management banks. Through its application, the English neobank Starling now offers couples the possibility of calming their arguments over household chores.
Source: BFM TV
