Financial planning must be intergenerational, expert says

Intergenerational financial planning may need to stay top of mind for reverse professionals

It’s important for financial planners to consider not only the impact that financial planning will have on their client — but also their children or grandchildren, according to Aditi Javeri Gokhale, chief strategy officer and president of retail investments at Northwestern Mutual.

“In my role as the head of Northwestern Mutual’s wealth management business, I’ve seen the passion that families have for setting up the next generation for success,” Gokhale wrote in an article for Kiplinger. “It’s clear, however, that financial resources alone are not enough to ensure intergenerational financial security. That’s why I believe intergenerational wealth planning can be a game-changer.”

A great wealth transfer is taking place between baby boomers and younger generations, and financial planning transparency will be essential to ensure smooth transitions, Gokhale said.

“Often, younger generations have little insight into the inner workings of the older generation’s financial plans,” the column states. “This lack of awareness can create complexity and confusion, especially if a significant life event occurs. During an emotionally charged moment like an unexpected accident or illness – the last thing that anyone wants to rapidly study is a loved one’s financial situation and the options they have available.”

This is why it’s important to have intergenerational discussions about a family’s finances and their future financial plans — and understand how oversight of a family’s wealth will need to be managed once a transition occurs, Gokhale said.

These conversations are pertinent to the reverse mortgage industry, as many reverse mortgage professionals, including loan originators and counselors, may have to field detailed questions from a borrower’s advisors, including their adult children.

These parties can also be critical of a client’s decision to either take out or avoid a reverse mortgage. According to a 2022 survey conducted by leading industry lender American Advisors Group (AAG), 62% of adult children report feeling concerned about their parents’ financial planning measures in light of historic inflation and increased living costs.

“This data shows why it’s important for our industry to focus on providing education around our products, not only with the seniors we serve, but with their families as well,” an AAG spokesperson told RMD. “Americans are searching for financial solutions to help the seniors in their lives and our products can be a solution.”

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