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Listen now! Wealth transfer: Tips for productive family conversations

Discover ways families can work together to overcome what can be a difficult subject to discuss.

Family sits closely together outside.

Let’s Talk About Wealth is a new podcast series that touches on compelling topics for families of wealth. Through stories and conversations with specialists from Wells Fargo Private Bank, we help listeners learn how others have discovered ways to make more of an impact with their wealth — including wealth transfer.

Host: Noah Thomsen

Guests:

Michael Liersch, head of advice and planning, Wealth and Investment Management

Chris Pegg, senior director of wealth planning for California and Nevada

Elizabeth Jensen, senior wealth planning strategist, Wells Fargo Private Bank

Katherine Dean, head of family dynamics, Wells Fargo Private Bank

Allison Gregory, senior wealth advisor, Wells Fargo Private Bank

Podcast transcript:

[Michael Liersch]:

So, when it comes to talking about money, especially when it comes to talking about wealth transfer strategies — who you’re going to give to, why, and possibly how much. A lot of people go very quickly to NOT wanting to talk about it, because they are afraid of the family dynamic that it’s going to create.

Perhaps it’s going to disrupt people or create distrust in the family, or fights. And what we want to highlight is actually the data suggests that the opposite is true. When you intentionally communicate about wealth, you know, the right amount of information and the right time, it can actually create family harmony and unity because everyone is anchored around the intentions for that money, the meaning of that money.

So, I want to encourage you, as you’re listening to this dialogue, instead of thinking about the risks of talking about your wealth transfer strategy, think about the risks of NOT talking about it. Because at the end of the day, what we all want is our money to have its desired impact. And communication can help us get there.

[Noah]:

I’m Noah Thomsen. Welcome to “Let’s talk about wealth.” You just heard the voice of Michael Liersch, head of advice and planning for Wealth and Investment Management at Wells Fargo. His team, in part, helps guide clients in handling their transition of wealth with openness, cohesion, and success.

In this episode, we’re going to talk about transferring your wealth. Specifically, the sometimes difficult conversations you may be reluctant to have with your family about your estate plans.

Music  

Joining us now is Katherine Dean, head of The Private Bank’s Family Dynamics practice. She has a lot of experience in ways to start and encourage that dialogue. Hello Katherine.

[Katherine]:

Hi. Nice to be here. 

[Noah]:

So, Katherine. As a specialist, help me out, what’s the best way to start this segment?

[Katherine]:

Well, to begin, the biggest concern parents have is that they think their kids will grow up to be entitled. We recently surveyed Gen Z and younger Millennials1 in wealthy families and they indicated the most important thing they will inherit from their parents is actually the family’s values, not the wealth. Additionally, they overwhelmingly expressed a desire to be more involved in the family finances. Especially as they seek to grow their own financial acumen.

[Noah]:

That’s good to know.

[Katherine]:

Yeah. It’s interesting. The Rising Gen would welcome these types of conversations. In our survey, we learned that 84% of them want to sustain and build on their family’s legacy. The younger generations give themselves very mediocre grades when it comes to overall financial literacy. And even worse grades when it comes to more complicated matters.

[Noah]:

That’s big. Sounds like Gen Z and Millennials are eager to learn.

[Katherine]:

That’s right. And beginning the discussion around their ideas and values, and what they want to know more about… those are great places to start the conversation.

[Noah]:

That’s not where most parents start?

[Katherine]:

No, in our experience, we’ve had clients who wanted to talk about their estate plan with their adult children. I think that illustrates amazing intention — wanting to bring their kids into the inner circle, so to speak, BUT, approaching it that way can also have unintended results.

One family I remember tried on their own to have that ‘talk’ … twice. They really expected kumbaya, instead they got kaboom. Both times it failed miserably, you know, everyone on edge, arguing. The parents were perplexed to say the least, and they came to us — the Family Dynamics group – for advice.

[Noah]:

What happened?

[Katherine]:

What we discovered was, the adult kids were invited to a meeting, but weren’t told what the meeting was about. So, they got nervous. It wasn’t common to even have family meetings like this. So, they came to the meeting with really a defensive mindset. The meeting was not set up for success from the get go.

[Noah]:

Katherine, I have to ask. With the guidance from your team, was the 3rd time the charm?

[Katherine]:

Yes. It definitely was. Creating cohesion takes planning and preparation. That means laying the groundwork which can sometimes mean pausing on your ultimate goal like sharing your estate plan until you build a new framework. That could include signaling a switch in lanes (this is different than what we normally do as a family.) Let’s acknowledge that. It can include creating a safe space where everyone can be heard — meaning this isn’t my parent’s meeting… it’s our meeting.

And it can mean collaborating to design protocols, procedures, agendas. Because after all, we’re all human and we need time to establish new patterns to make them feel normal. 

[Noah]:

How do they go about that doing that?

[Katherine]:

Great question. That’s where our team comes in. We work with families to set clear expectations upfront so there’s little room for misinterpretation down the road.

Our goal is to help create engagement and collaboration across the family. So, we help co-design and facilitate these types of meetings to help keep it positive and productive for all.

[Noah]:

That’s quite a story, Katherine. Appreciate you sharing it with us.

[Katherine]:

My pleasure, thanks.

Music

[Noah]:

Next up, we’re being joined by Chris Pegg, senior director of wealth planning for California and Nevada. And Elizabeth Jensen, senior wealth planning strategist. Both with Wells Fargo Private Bank.

[Chris]:

Thanks for having me. 

[Elizabeth]:

Me, too. Nice to be here.

[Noah]:

I know both of you deal with the more financial and technical side of transitioning wealth — like the planning strategies and guidance you share working closely with your clients.

But what’s your take on the lack of communication within a family…  And the possible effects it can have on the wealth transition plan?

[Chris]:

Yes. Communication is critical in these situations. Often when we see the whole family gathered together and we want to discuss what their future looks like; it seems relatively clear. It seems that vision is understood. Now, when the definition occurs it’s almost always led and defined by the senior generation. And, of course, in that context you get a lot of head nodding from the next generation. Everybody seems to be onboard. But when you get the opportunity to speak to the next generation individually, you may hear a different perspective from them. You may find out that they don’t define that vision in the exact same way.

[Elizabeth]:

Right, and that certainly can happen. And generally, it’s also not about getting along or not getting along. You can have dramatically different circumstances when a client finally passes.

For example, you might have one sibling who really has some serious liquidity needs. While you have another sibling who just wants investments. Somebody may want to plow money back into the business, and some siblings don’t. You really just have different people with different family units and different goals, and especially when you have assets that tie them together it can create friction points.

[Noah]:

So, how have you helped diffuse that potential drama within a family?

[Elizabeth]:

Yes. A lot of times we use a neutral professional third party to come in at the senior generations’ passing and handle a lot of what is normally fraught with friction… and that neutral 3rd party’s only job is to execute the document as the senior generation wrote it. So that can lead to preserving family relationships if there’s disagreements among the beneficiaries – generally they’re upset with the neutral party and not each other.

[Noah]:

Chris. I have to believe with significant wealth, there’s a great deal of technical, legal and tax issues. How does your team address those challenges in transitioning wealth?

[Chris]:

Yes, there are a number of things that you have to consider as part of this process. Despite all the technical issues and the expertise that’s involved, the most important thing to deal with is communication with families. And I want to be very clear, it is almost never too early to start having conversations about these issues. You could be ten years or more away from the actual transition of wealth. So, we would have a long runway. But it gives you time to communicate with the family. Put serious thought into the plan. And then you can watch the plan evolve. You can watch how the family reacts and how the family itself evolves.

[Noah]:

Hmm. That sounds helpful. Elizabeth and Chris, thanks for talking with us.

Music

[Noah]:

The more people I talk to, the more I realize that managing and transferring wealth requires lots of moving parts. There’s an army of professionals. CPAs, Estate planning attorneys, financial planners, fiduciary specialists. And the family’s wealth advisor plays a key coordinating role.

So, let’s talk to someone on the front lines. Joining me is Allison Gregory, a senior wealth advisor with The Private Bank.

[Allison]:

Hi Noah.

[Noah]:

Allison, how do you coordinate all these specialists on behalf of your clients? 

[Allison]:

Well, with a lot of specialists doing different and complex things all at once, if I’m not paying attention coordinating the to-do’s, and keeping the plan moving forward in a coordinated manner, you can end up with an overwhelmed, unhappy client pretty quickly.

[Noah]:

Well, you certainly don’t want an unhappy client. How do you bring that distributed brainpower together?

[Allison]:

We meet as a team to discuss where things are now, whether the estate plan is aligned with the family’s future plans and what adjustments may need to be made to keep the plan on track.

[Noah]:

Tell me. What else do you handle in your role?

[Allison]:

As their primary advisor, I typically have a more intimate relationship with the client and their families that enables me to see the larger picture. I anticipate potential life changes or family milestones, such as marriages, births. Maybe it’s the start of a new business. I know if they have an interest in philanthropy or thoughts about selling the family business. Often, when we’re dealing with complex family decisions, I also bring in our family dynamics specialists.

[Noah]:

Yes. We’ve heard quite a bit about them. Well, I can see how key your role and your highly tuned advisor antennae are in guiding your clients.

[Allison]:

Oh, is that my super power? (chuckles)

[Noah]:

It’s super helpful to have. Thanks for sharing, Allison.

Well that’s our show. I hope we’ve shown you the value that Family Dynamics can deliver in helping transition your family wealth. If you think you might benefit from engaging these specialists, please don’t hesitate to ask your wealth advisor.

Join us again for Let’s Talk about Wealth. I’m Noah Thomsen. So long.


1About the survey

On behalf of Wells Fargo Private Bank, Versta Research conducted a national survey of 1,003 Gen Z (ages16 to 21) and younger Millennials (ages 22 to 26) whose parents had an estimated net worth of at least $1 million. Sampling was stratified by age and gender and then weighted to ensure a sample that reflects the full U.S. population of children whose parents are millionaires. The survey was conducted between July 16 and August 3, 2018. Assuming no sample bias, the maximum margin of sampling error is ±3%.

Wells Fargo Private Bank provides products and services through Wells Fargo Bank, N.A. and its various affiliates and subsidiaries. Wells Fargo Bank, N.A. is a bank affiliate of Wells Fargo & Company.

Brokerage services are offered through Wells Fargo Advisors. Wells Fargo Advisors is a trade name used by Wells Fargo Clearing Services, LLC and Wells Fargo Advisors Financial Network, LLC, Members SIPC, separate registered broker-dealers and non-bank affiliates of Wells Fargo & Company.

Wells Fargo Bank, N.A. offers various advisory and fiduciary products and services including discretionary portfolio management. Wells Fargo affiliates, including Financial Advisors of Wells Fargo Advisors, a separate non-bank affiliate, may be paid an ongoing or one-time referral fee in relation to clients referred to the bank. The bank is responsible for the day-to-day management of the account and for providing investment advice, investment management services and wealth management services to clients. The role of the Financial Advisor with respect to Bank products and services is limited to referral and relationship management services.

Wells Fargo & Company and its affiliates do not provide legal or tax advice. Please consult your legal and tax advisors to determine how this information may apply to your own situation. Whether any planned tax result is realized by you depends on the specific facts of your own situation at the time your tax return is filed.

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What can Wells Fargo do for you?

As you think about your legacy and wealth transfer goals, take time to sit down with your wealth management professional and outline your vision.

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