Time to break the silence on generational wealth: Edward Jones

A new study conducted by Edward Jones sheds fresh light on one critical, yet often overlooked aspect of family financial planning: conversations surrounding the transfer of wealth.

With an estimated $84.4 trillion expected to change hands from the baby boomers and the Silent Generation to younger demographic groups by 2045, according to Cerulli, the need to have these discussions is as great as it’s ever been.

But despite the significant impact this generational wealth tsunami will have, the research from Edward Jones – in collaboration with Next360 Partners and Morning Consult – points to a startling lack of communication among American families.

While nearly half (48 percent) of Americans intend to leave an inheritance – including 45 percent who will give it only to their children, and 36 percent who plan to include grandchildren as well – a substantial 35 percent have no plans to discuss these intentions with their family members.

"We know it can be extremely uncomfortable and nearly impossible to separate emotions from the financial decisions necessary when planning inheritance and wealth transfer, particularly as givers navigate family priorities beyond finances,” Lena Haas, head of wealth management advice and solutions at Edward Jones, said in a statement.

The study also emphasized the evolving nature of inheritance, with just over two-thirds of Americans (68 percent) acknowledging that increased longevity and higher living expenses will influence the wealth passed down to future generations.

This shift has resulted in diverse approaches to wealth transfer, Edward Jones said, including traditional giving, giving while living, and generational skips. In the most extreme cases, longer-than-expected lifespans and expenses related to health challenges or long-term care could leave older generations unable to provide an inheritance.

While a 71 percent majority of adults with children say they’re comfortable engaging in discussions around generational wealth, only 27 percent say they have actually done it.

Among those who’ve already had the talk or plan to do so, two-fifths (40 percent) have touched on saving for retirement, while 36 percent said they’ve discussed managing personal finances. Charitable giving and family business succession plans, meanwhile, figured among just 21 percent and 23 percent of respondents, respectively.

"The wealth transfer conversation needs to be dynamic, with 'The Talk' happening before 'The Transfer,'" said Joe Coughlin, senior advisor to Next360 Partners.

While a third of respondents said they feel pride (34 percent) or fulfillment (33 percent) in passing on inheritances, only about a quarter of adults feel prepared and confident in the process.

Those receiving an inheritance say they mostly feel grateful for it (61 percent), but around one-fourth also feel they’re not ready (25 percent) or feel anxious thinking about it (19 percent).

The study suggests that engaging a financial professional could help allay these concerns, as 57 percent of Americans believe expert guidance would simplify planning and allow families to arrive at a consensus more easily.