Nearly half the country struggles to discuss finances with loved ones despite the fact that 93% believe in the importance of planning for their financial future, according to a survey conducted for Lincoln National Corp.
The Philadelphia-based insurance and financial services company doing business as Lincoln Financial Group has it annuities operations based in Fort Wayne and is an important local employer. It released those survey findings around the winter holiday season when families typically have more time to relax together and talk.
The company had the survey conducted to better understand if, how and when Americans are having financial conversations with loved ones, said Kristen Phillips, a Lincoln senior vice president for corporate marketing, communications and strategy.
She said the company hoped the research would shed light on:
• Perception: How Americans presently feel about the financial conversation and its value.
• Occurrence: If and when conversations are happening, and if they’re relevant during critical moments in their lives.
• Method: The goals of the conversation and how they are being approached.
• Audience: The segments of Americans who are finding ease — or struggling — with financial conversations.
• Cause and effect: If having financial conversations creates confidence in their financial outlook.
“We found that while many Americans understand the importance of having financial conversations, they still feel overwhelmed and uncomfortable about having them,” Phillips said.
“Lincoln knows how important and effective these conversations can be and we want to empower people to have them. So, we developed The (Un)Spoken Plan, a provocative campaign that engages with consumers and lets them know that we have resources that can help.”
Findings of recent academic research at four universities including Indiana University underscored the importance of this type of communication.
Jenny Olson, an Indiana University professor who recently co-authored “Love, Lies and Money: Financial Infidelity in Romantic Relationships” for the Journal of Consumer Research, said in an email that financial conversation is essential to good relationship maintenance.
“Money is deeply emotional and represents more than dollars and cents – it’s love, security, freedom, fear, and power. These associations are one reason why Americans find it difficult to have financial conversations with loves ones,” she said.
“Although difficult, having regular conversations is important for both relationship and financial well-being. I’d recommend scheduling these conversations ahead of time, otherwise you risk catching your partner off guard and putting them in defensive mode,” Olson said.
“One thing to discuss is spending thresholds ... how much money can each partner spend independently before they need to discuss? Every couple is different here; what matters is being aligned.”
Lincoln’s (Un)Spoken Plan campaign involved the creation of some videos to get its message across, which can be viewed at https://bit.ly/2FQF0Hy.
The videos show unsuspecting families at a restaurant who are surprised with a menu featuring items associated with data and conversation starters related to retirement, financial planning and protection topics.
The families in the restaurant were told by servers they could only pay for their meals by having meaningful financial conversations with their loved ones.
“Financial conversations help set expectations now and reduce uncertainty later. We recommend families share their views on retirement, life insurance, long-term care and other financial planning issues, as well as how to best move forward to achieve their financial goals,” Phillips said.
“For example, asking questions like ‘Do we know what our monthly expenses would be in retirement?’ or ‘What would happen if someone in our family was sick or injured and could no longer work?’ are great ways to drive a healthy, productive discussion,” she said.
By establishing intentions ahead of these types of conversations, it can be clear that they are coming from a place a love, she said.
“Remind family members that the goal is to help everyone live better, more secure lives. These are great guard rails to help lower any potential family friction,” Phillips said.
“And guess what? It turns out these conversations aren’t as hard as many may think. The research showed that 66% of those who had a conversation recalled it being easy, and less than 1% thought it was very difficult.”
The research showed the more people talk, the better they feel about their future, she said.
“For example, among those who have had a financial conversation with their loved ones, 86% feel confident they can retire when they want, and 95% feel more confident about their financial future overall,” she said.
Conversely, avoiding financial conversations can delay financial planning and reduce financial confidence.
The survey found individuals who don’t have conversations about finances are less likely to have a plan. And Phillips said among those respondents, financial confidence is alarmingly low:
• 86% do not feel they have saved enough for retirement.
• 51% do not feel confident that loved ones would be covered for living expenses in the event they or their partner pass away.
• 55% are not confident in their retirement.
• 88% do not know or do not feel they have saved enough to protect themselves and their loved ones in the future.
Financial conversations can be crucial to preparing for a stronger financial future, particularly when significant life moments are approaching such as marriage, having a baby and retirement, Phillips said.
“When the lines of communication aren’t open, it’s easy to have a misunderstanding,” she said. “Being transparent about current financial status and priorities — as well as future plans — helps people develop and work toward shared financial goals.”
Planning for their financial future is not something Americans and their loved ones have to do on their own, and Phillips said financial advisors can help with that before, after or even during a financial conversation.
“Our research found that people who had a financial advisor were 74% more likely to have had a conversation about their finances with a loved one versus those who didn’t,” she said.
“Financial advisors help keep conversations going and keep plans relevant, especially since their priority is securing a stronger financial future for their clients. The goal is to have these talks frequently to ensure that as life changes, financial plans change with it,” she said.
“At Lincoln, our advisors serve as a third party that couples and families may find especially helpful as they navigate what can sometimes be an emotional conversation.”