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Family Wealth Planning

Family Wealth Planning: A Perspective on Perspectives

At RegentAtlantic, we enjoy partnering with multiple generations of our clients’ families. Not only does it allow us to further build upon strong relationships, but it gives us constant exposure to new challenges and perspectives that previous generations might not have shared. We appreciate this as advisors because it forces us to continue to think creatively when discussing financial planning strategies. 

On our inaugural episode of the Family Bonds podcast, advisor Chad O’Brien and I addressed one area where we often see contrasting views among different generations: taking on debt.  We concluded that there may be a “right” answer from a quantitative perspective, but the intangible “sleep-at-night” factor plays just as big a role in financial decision-making. 

My parents’ generation grew up in an era where mortgage rates were consistently 10% or higher. They were always told that debt was “bad” and paying it off was the best thing you could do.  In reality, taking out a mortgage or completing a cash out refinance today may be beneficial for some in their situation. Those proceeds could be reinvested in the market with the idea that you earn a higher return than the interest you are paying on the loan. This could potentially leave you with more in assets at the end of the term. It may seem simple, but the environment they grew up in has convinced them otherwise.

More recent first-time home buyers have had the chance to shop during an extended period of low interest rates. Not only has this benefited them at the initial purchase, but it’s also allowed for the opportunity to conduct those refinances that I mentioned above. This likely younger demographic has not been forced to carry debt at those 10%-plus interest rates, which could be one reason why they are not averse to it.  Another reason could be because they are used to carrying some form of debt given the multitude of student loans out there.

This is a simple illustration, but sometimes different perspectives can cause tension within family dynamics, especially when wealth is involved. Think about conversations you may have had at Thanksgiving dinner. Conflicting views likely come up on an array of topics, from politics to music to the use of social media. At the end of the day, it is important for each generation to understand that they did not lead the same lives as their parents, nor will their children live the same way that they did. Each generation is molded by the era in which they grew up.  How can we handle these tensions? In my opinion, the first step in addressing this is to have open conversations about each individual’s values and the drivers behind those values. Understanding why each generation thinks the way they do is important as opposed to chalking up contrasting views to being a “rebellious teenager” versus an “old-school thinker.” Consider making these conversations regular, both in terms of frequency and attendees. Start with topics that may be less sensitive – such as music – to build confidence and comfort for all participants. Eventually, you can work your way up to areas such as finances.  When that time comes, reach out to your Wealth Advisor to help you develop an agenda for and facilitate a family wealth planning meeting.

Important disclosure information

Please remember that different types of investments involve varying degrees of risk, including the loss of money invested. Past performance may not be indicative of future results. Therefore, it should not be assumed that future performance of any specific investment or investment strategy, including the investments or investment strategies recommended or undertaken by RegentAtlantic Capital, LLC (“RegentAtlantic”) will be profitable.

Please remember to contact RegentAtlantic if there are any changes in your personal or financial situation or investment objectives for the purpose of reviewing our previous recommendations and services, or if you wish to impose, add, or modify any reasonable restrictions to our investment management services. A copy of our current written disclosure statement discussing our advisory services and fees is available for your review upon request.

This article is not a substitute for personalized advice from RegentAtlantic. This article is current only as of the date on which it was sent. The statements and opinions expressed are, however, subject to change without notice based on market and other conditions and may differ from opinions expressed in other businesses and activities of RegentAtlantic. Descriptions of RegentAtlantic’s process and strategies are based on general practice and we may make exceptions in specific cases.

RegentAtlantic does not provide legal or tax advice. Please consult with a legal and or tax professional of your choosing prior to implementing any of the strategies discussed in this article.

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