If parents and children want to come to agreement about their financial goals and futures, goals that might be at odds when children increasingly need help into adulthood, the best thing to do is put the agreements in writing, say two advisors with Voya Financial Advisors.
A contract can put any financial conflicts between parents and children into focus and help both sides stick to the decisions that are made in conjunction with a financial advisor, said Matt Stagner, a senior advanced planning consultant with Voya.
Stagner and Marilyn Timbers, a Voya retirement coach, said it can be the financial advisor’s duty to step in and help mediate disputes arising over finances between parents and children.
“This is part of what advisors do because it affects clients’ financial lives,” Timbers said. “These can be emotional situations, and a third party can address the issues in a nonconfrontational way. [The parties] sometimes cannot see beyond their emotions.”
Timbers said she had a female client in her 50s thinking about her future retirement. The client had two adult daughters, both college graduates, living with her and not making any financial contributions to the household.
“I met with her and her daughters and we talked about the mother not being able to achieve her retirement goals in the current situation. The daughters were just used to having the mother take care of things,” Timbers said.
With the help of Timbers, the family worked out a new arrangement where the daughters contributed to expenses and the mother could save more money.
The client needs to agree ahead of time about how much to share with the children, Timbers said.
“The main thing [for the advisor] is to remain a neutral party: just be a mediator,” she said. We can just show the facts to the family; it is not up to the advisor to make the decisions.”
Stagner added, “A financial advisor is uniquely positioned to help in these situations. Much of what we do is behavioral in nature.”