Morgan Stanley
  • Women Financial Advisor Forum
  • Aug 19, 2020

The M Word Blog:
Money and Millennials

Family Wealth Director Lori Sackler looks at ways for millennials and baby-boomers to engage in honest conversations about money.

Let’s dig deep into the money issues facing millennials and their “ageless” baby boomer parents, and how they can better communicate to each other regarding them.

After a 10-year bull market, the longest in American history without a 20% or more correction ( as of February 2020), individuals regardless of age started to question how long it will last and how they should prepare for a downturn when it finally arrives.  Boomers, before the current economic downturn  had concerns about what impact a market declines would have on their future income as they continued  to enter retirement years and worry about exposure to inflation and higher medical expenditures. Factoring in extended longevity stats, they were worried about having enough, while continuing to care for family members in need.

Now, with the Covid-19 crisis and the economic downturn, the concerns are heightened for both generations.

Millennials though, less concerned about retirement at this point, are now wondering what interest rates and housing prices will look like in the near future and beyond, and the impact this economic downturn will it have on their ability to marry, buy a home, start a business, and raise a family. It’s probably a good time for both generations to address these concerns and have meaningful dialogue with advisors and with each other.

Talking about money, or having “money talks” is not an easy task. As I wrote in a previous blog, “I highly recommend that you figure out your particular situation and decide what topics need to be addressed, the conversations that need to take place and how to best approach them.” Based on my years practicing as a Financial Advisor, identifying the transitions and topics that you need to discuss is the first step in my five-step process which was the subject of the last blog. The second step, which will be the focus or our discussion in this blog, is identifying the factors that are interfering with you having your very important conversation. Understanding why your family is not having your money talk is critical to working through the issues and successfully navigating each life transition.

In my view, “money talks” around life events are like a Shakespearean play. There is the obvious drama and conflict on the surface, coming from the specific situations and circumstances. Then there are the hidden elements- the covert factors underneath the surface and the subtexts in the texts- that make the conversations and the dramas epic. Having a money talk during one of the transitions in life—changes in financial circumstances (either up or down), marriage, having children, retirement, aging parents and transferring assets- is difficult enough because of the inherent drama in each situation. When you add the hidden factors, issues of control and trust, the role of family members, health issues, gender differences, evolutionary behavior patterns, individual temperaments and attitudes, age, family history and culture- having a money talk is a fairly daunting challenge.

Let’s examine a few of the elements. Most families are dealing with control issues and asking questions like “who has it, and how do we work with that individual to relinquish?” Alongside that is the big trust question, “who can I trust to make important financial decisions?” Then there are the health issues that nobody wants to discuss, and the different roles each person in the family plays. Obviously from this batch of factors, you want to uncover the players, what the issues are, what roles family members should play, and ultimately how to best to approach and manage the personalities and issues (which is the subject of steps 3-5). But even further below the surface are more subjective, covert and emotional pieces to the puzzle: gender, DNA, individual temperaments, family history, age, etc.

Gender plays a big role in how to talk about money as there are real differences in the way men and women make financial decisions and manage money. Men tend to plan around retirement goals, while women inherently think about the financial impact on the family when planning. Women also tend to be more conservative and think long-term in their investment strategy, while the time horizons of men tend to be more short term with higher levels of risk taking. The styles of communicating and resolving differences are very different between the sexes. These kinds of differences can create conflict and make financial decisions and conversations much more challenging. Understanding and identifying brain-based differences in your family, confirmed in more than 30 studies worldwide, is critical to creating a plan of action and effectively communicating and executing plans around money matters.

Family histories also inform how people approach money matters. Each individual brings her or his unique family history, rooted in generations of experience, to every conversation. Many people have unresolved emotional or psychological issues from their past that bubble up to the surface when they find themselves in difficult conversations. You can actually map out a money gram to see the patterns along acquiring, using, and managing money. Try looking at the patterns in your family vs. your significant other and see if you don’t see real tangible differences that are at the core of your family money conflicts.

My final factor-example, age, is probably the most relevant when dealing with millennials. Typically, you don’t speak the same way to your 65-year-old Mom, your 30-year-old sister or girlfriend of 25. And that is simply because of your different relationships with them, with money, and communication technology in general. Think how differently the boomers, born between 1946 and 1964, who grew up during the post-World War II economic boom, “a house for every family and a car in very garage”, think about money vs. the millennials, born between 1981 and 2000. Their early and later formative experiences include Columbine, 9/11, Hurricanes Katrina, the globalization of the economy, and two major economic downturns: the technology bust of 2000 and the Great Recession of 2008-2009. Their disposition is much more cautious and mistrusting of institutions. Because of their intimacy with technology, they tend to be more comfortable with technology in all forms of their lives. Finally, their vocabularies with money based on life experiences and levels of education are also very different.

So, having given you a taste of “Understanding the Inner Landscape” ( or the hidden emotional factors preventing the conversation),  I hope you are ready to think about the factors that have shaped your family’s approach to money and money talks, and even consider moving on to the next step which is “Preparation is Critical,” or preparing for the talk. Given the economic and health concerns that both generations are currently facing, the time is now. In my next blog, we will touch on how to actually think in advance and prepare the players and the agenda, so you can have successful conversations regardless of which transition you are navigating. Having successfully navigated the markets and decisions thus far, maybe it’s time to rethink about the next decision you are faced with in your financial plan in the current environment and beyond.

About the Author

Lori has designed her practice to help clients keep up with the pace of change in their lives, have time to reflect and satisfy security, lifestyle and legacy concerns. With her team and the professionals at Morgan Stanley, she acts as a personal chief financial officer for her clients. The Sackler Group chooses to work with a limited number of clients for whom they can have a meaningful impact.

Lori has the unusual distinction of holding three designations: CERTIFIED FINANCIAL PLANNERTM, CERTIFIED INVESTMENT MANAGEMENT ANALYST®, and FAMILY WEALTH DIRECTOR. An established thought leader, Lori has published numerous articles and books, including “The M Word: The Money Talk Every Family Needs to Have” and “The M Word Journal: How to Have the Money Talk.” She also created and hosted a popular radio program in New York City.

Lori earned her BA with Distinction from the University of Michigan and holds an MS in Marketing and Finance from the University of Texas. She is also an accredited (non-practicing) CPA and is a member of the NJ Society of Certified Public Accountants. Morgan Stanley honored Lori with appointments to the exclusive Regional and National Financial Advisor Councils, and named her an Alternative Investments Director. In 2017, Forbes Magazine named Lori one of the Top 200 Women Wealth Advisors in the U.S., and then chose her as one of the Best-in-State Wealth Advisors in the U.S. in 2018.*

* The criteria for these awards do not include factors relating to investment performance. Neither Morgan Stanley Smith Barney nor its Financial Advisors pay a fee in exchange for the rating.