Stuck in the middle with you
By Paul Wilson
The Silver Tsunami is no longer a vague threat lurking out at sea. It began slamming into shore in 2011, when the baby boomers started turning 65, and has been shaking the foundations of retirement planning ever since. Boomers swept up in this demographic shift have experienced significant changes in their relationships with those around them, including their families and their advisors.
Many boomers now find themselves in the unfamiliar role of providing financial and emotional support for both aging parents and children struggling to achieve financial independence.
Nearly half of Americans in their 40s and 50s (47 percent) have a parent age 65 or older and are either raising young children or supporting a grown child, according to a study released last year by Pew Research. Approximately 15 percent are providing financial support to both an aging parent and a child.
As these pressures mount, many boomers are increasingly turning to their advisors for support— and it isn’t limited to financial advice.
“I have conversations with clients about the challenges of being in the sandwich generation almost on a daily basis,” says Thomas Froehlich, president and CEO of Froehlich Financial Group in Spring Lake Heights, N.J. “Most of my clients are in their 50s, and that’s the age when we’re all faced with it. You’ve got the kids’ college, you have your parents and between all of that you’ve got to worry about your own retirement. ‘Will I be able to retire? How long will my money last? What’s my lifestyle going to be like?’ It’s very challenging.”
And he should know. He experienced it firsthand.
Building experience the hard way
Froehlich’s mother got sick first. She was living in the two-story house where he grew up, which was slowly falling into disrepair. Froehlich and his siblings sold the house, pooled their money and bought a mother/daughter property where his sister and her husband moved in with their mother and took on the caregiving role. They agreed that Froehlich, who had twin teenage boys at home, would take care of the money management side of things due to his professional background.
Watching his sister and her husband care for his mother gave Froehlich a whole new respect for them and others in that position. “That’s one of the most stressful things on a marriage that you could deal with,” he says. “It’s hard enough to be married and maintain a strong relationship while working, raising kids and everything else going on. And if you’re the spouse, it’s not even your mother. I told my brother-in-law, I will love and respect him forever for the work he did for my mom.”
Several years after his mother passed away, his father, who lived in Florida with Froelich’s stepmom, became ill. “So now I’m flying up and back and dad gets worse and worse and eventually he’s in hospice. He was in hospice for about three weeks. It wasn’t financially devastating for me since I own my own company and I can bring a laptop and phone and work from wherever. But imagine if it was someone who had a real job. How do you take off time and go sit with your dad every day while he expires?”
Beyond the logistics and financial hardships, Froelich also recalls the emotional toll the process took on him. “Personally, it’s a very, very tough experience to watch somebody you love wither away and die,” Froehlich says.
Looking back, he believes these experiences have helped him better understand how to help clients who are going through similar trials.
“Advisors have to have empathy; they have to be caring and giving people,” he says. “Because it’s not only about the money. And if it is only about the money, I think they’re in the wrong business. And it comes across that way to the client, I guarantee it.”
The light of understanding
“I think advisors really have to know their clients in a different way than they’ve ever done before,” says Lisa Gray, founder and managing member of graymatter Strategies LL C, a consultancy in Richmond, Va. for families and their advisors.
In addition to providing traditional financial advice, she says, boomer clients are now relying more heavily on their advisor for emotional support. Advisors “need to learn to listen much better, instead of just touting their firm’s credentials or capabilities.”
Advisors who don’t understand generational views of the world and the dynamics of each family are “functioning in the dark,” Gray says. She recommends that advisors take the time to discuss retirees’ assumptions about the rest of their lives and uncover what younger people may be expecting from their parents.
A recent study of single-family offices by the Wharton Global Family Alliance cites non-financial components as one of the key drivers of wealth performance. “If you have a family that’s disagreeing among themselves, they’re going to have difficulty making important decisions about investments,” Gray says. “But when you have consensus and engagement, they’re going to make much better decisions and they’re going to be a much better client for you as an advisor.”
When family relationships combine with finances, a variety of issues and tensions can arise, Gray says. Battles for control and power plays within the family dynamic can be particularly damaging, she notes, and it’s important that advisors help their clients navigate these potentially volatile areas.
“Control is a delusion,” she tells clients. “You cannot control what your kids are going to do with the money you leave them. You cannot. You might as well stop fooling yourself. What you can do is influence them. You can share your values with them. You can understand their viewpoint and learn to speak their language.” She says many boomer parents struggle to let go of the financial reins and fear their kids will make irresponsible decisions with their inheritance, but “those are assumptions you’re making. You’ve never talked to them about it. You’re the one who raised them, so give them some credit for being smart people and coming from smart people. They might have some ideas that you haven’t thought of. They might surprise you."
Advisors who help clients through these tough and personal conversations are rewarded with a higher degree of trust, she says.
"When you have a real high-level trust relationship with a client and you’ve been almost part of their family, you’re making an effort and building a relationship with these younger generations. You’re setting yourself up for a very satisfying second half of your career. And you’re also going to feel like you’ve made a real difference in the lives of that entire family.”
“We focus on the money, because that’s our domain as advisors, but it’s about more than that,” says Mari Adam, CFP, president of Adam Financial Associates in Boca Raton, Fla.
Like Froehlich, Gray says she relies on her own personal experiences to help clients with their relationships and conversations about money. Over the years, she’s come to learn that helping clients sometimes means initiating tough conversations.
One of the most common issues Adam sees with her clients in the sandwich generation is the financial and emotional pressures of helping grown children.
While she acknowledges that wanting to take care of children is “just the nature of being a parent,” Adam says she began noticing a growing pattern among boomer clientele who were financially enabling their grown children and putting their own financial futures in jeopardy in the process.
“I think as boomer parents, we have grown up in a climate where we do tend to be more enabling,” she says. “We tend to want to do everything for our kids and I think we have done them a disservice.”
At first, she was uncomfortable bringing this issue up with clients and feared she was “butting in.” But eventually, she says she decided, “You know what? This is our job, because it’s hurting our clients.”
She has come to understand the importance of “helping parents learn how to say no, and to evaluate the needs of the grown kids so they feel comfortable saying no. We don’t want to see them use their own money to turn grown children who should be financially responsible into people who are no longer able to care for themselves.” She advises clients to carefully consider requests from grown children. If it’s an emergency and they need medical care or they are going through a divorce and need some temporary help, then it may be something to look at. “But don’t continually pay for a lifestyle for someone that they cannot pay for on their own. Because then it becomes an expectation that you’re going to continue giving them the money.”
One of Adam’s clients is over 70 and would like to retire, but continues to work to bolster her retirement funds after years of helping her children financially. And while Adam wishes thing were different, she says, “She’s getting closer to having a good retirement because we finally stepped in and started this discussion. If we had not done that, she would be in a much worse situation. It really is a great feeling to know [clients are] where they are now because we did certain things. As an advisor, there’s nothing better.”
A good advisor
Froehlich says age and experience have given him perspective that he lacked as a younger advisor. Despite his busy schedule, he makes the time each week to take his two Nova Scotia Duck Tolling Retrievers, Charlie and Lexie, out for pet therapy sessions, where they visit local schools and spend time with clients in rehab centers, nursing homes and hospice facilities. ”It’s a nice feeling to be able to help [sandwich generation clients] on a personal level, because I’ve lived it,” he says.
Successful advisors adapt to shifts in their clients' lives, Gray says, and connect with them on an emotional level.
“Advisors are a dime a dozen,” says Gray. “But a good advisor is empathetic. A good advisor really cares about that family, and realizes that each family is unique because each person is unique and each group of generational dynamics is unique. A good advisor is rare.”