Why banks should help families break the money-talk taboo

American families dislike talking about money – a recent Wells Fargo survey found that 40% of people would rather talk to their parents about their funeral plans than about their financial plans.

Michael Liersch, head of advice and planning for Wells Fargo Wealth and Investment Management, joins us with insights on how banks can help families build more open relationships about money, and why it’s in the banks’ interests to do so.

A few takeaways from the conversation:

• Many people believe avoiding money talk is better for family relationships, but Liersch says the opposite is true: Healthy money conversations help build family cohesion.
• Banking institutions can help break down these barriers by really understanding their customers’ financial wants and needs, and then track progress toward those goals.
• He suggests three key questions to tee up constructive conversations – two are for parents and focus on goals, and the third is for children to demonstrate their support.

‎

INTERVIEW TRANSCRIPT

Michael Liersch, head of advice and planning for Wells Fargo Wealth and Investment Management, welcome to the BAI Banking Strategies Podcast.

Thank you so much. Happy to be here.

Michael, the study that we’re going to be talking about today, why did Wells Fargo do the study? Where’d the idea come from? Who did you talk to in conducting the study? And most importantly, perhaps, what were you trying to learn?

Well, what we wanted to learn is we wanted to understand what real human beings were thinking about in terms of family conversations around money, and in particular, how younger people was a big focus of the study, were helping their parents think through money or what their expectations were in terms of how their parents might provide for them in life and after life when it came to money. So our interest was really in the family dynamics of all of that.

Can you give us some of the top line findings from the study?

The most interesting finding was that there are a lot of families who find it very difficult and taboo to have any type of conversation around money. And so one of the study questions asked, what would you rather talk about, for example, than about money with your parents and especially around maybe the money you might get or not get? And a large number of respondents said that they would rather talk about their parents’ funeral plans with them than talk about money and how their parents were managing that money. So when you think about people being more willing to talk about death and death plans than money, you start getting a sense for how challenging these money dialogues are.

So why is money talk within a family so difficult? And what are some of the ramifications of not being able to have conversations about money?

Money talk is challenging, and our study alluded to this because people don’t have a framework in which to talk about it. And there’s a underlying fear that talking about money is going to be more disruptive than keeping it silent. And we call that “money silence” as the default. So people think that you actually have a more positive family dynamic because you’re not arguing, or you’re not going to get into potential conflict, or visit things that you may or may not have wanted to do or should have done. So the idea here is that people’s intuitions in families is that not speaking about those things will lead to better relationships than talking about them. Ironically, the opposite tends to be true, meaning when you do have the dialogues and get past some of those truly difficult conversations, you can actually reveal what’s working and what’s not in a family and help parents or children or the family in general make better money decisions.

I want to talk about this family dynamics part a little bit, and I want to sort of talk about it in the sense of not only where there may be tension or there may be difficult relationships among family members, but also where there may be, say, trust issues among siblings or even across generations. Can you talk about that a bit?

So when we think about this idea of family dynamics and a lack of trust in families, there’s a set of expectations that I think we all have, that we are somehow coming from the same place when it comes to how we think and feel about money. And that is actually not true. And so I think it’s really important for us all to highlight that when it comes to how we think and feel about money, we are actually coming at it from our own individualistic perspective, our own personal experiences, and in a family those can be quite diverse. It depends on how old you are. Were you the oldest sibling? The youngest one? It depends on what generation are you? Are you a grandparent? A parent? A child? All these things impact how you think and feel about money. Also, what economic environment you’re in, what job you have, how much you make? So we all have to really get into this framework that our own thoughts and feelings actually create a bias that we’re approaching a conversation with someone else. And so we need to reframe it and say, how do we become instead of biased in our own perspective, more curious about other people’s perspectives? And that can help us enhance trust because the distrust is created by that bias because we overlay our perspectives on others and then they react negatively. And somehow we interpret that as a relationship conflict or something that’s not to be trusted when in fact if we were curious, open-minded, asked each other questions – Why do you feel this way? Why do you think this way? – we might uncover that, based on the experiences of the other person, it’s quite rational and it makes complete sense why they think and feel that way. And then you could actually start finding common ground, which helps start instantiating that trusted relationship.

In that answer, you were talking about generations being one of the variables here. Younger people today – Gen Z certainly and many of the younger millennials – are more willing and in many cases they’re even eager to share a lot more about themselves now than younger people of previous eras. These same younger folks are in line for the greatest wealth transfer in the history of the world here in the coming years, too. Did your study find any significant generational differences when it comes to comfort level with money talk?

It did actually. Millennials were found to be more likely to expect that they’ll be in charge of their parents’ finances, for example. And what’s also interesting is the study found that they are more likely than other generations to want to be in charge of their parents’ money. So it’s really fascinating because, to your point, we see this desire not only to be in charge, but this sense that millennials get that they are really going to be their own financial advocates. Millennials have grown up in that era where they need to make their own way, they need to create their own financial success. It seems that there’s a sense in which they overlay that on their family situations, too. And they get that if they don’t do it, and if they don’t want to do it, then it’s either going to happen to them or that it’s not going to get done. And so how do they then get the information they need, whether it’s through social media, family, friends, their parents, to actually make the right decisions on behalf of the entire family. It was a really interesting finding in the study.

Based on what you know as a behavioral scientist, is this reticence about money talk a uniquely American thing or is there a tendency for people to have this in other countries as well? And if it is an American thing or something that is maybe more pronounced here, what do you think accounts for that?

In the United States, I think we can generalize in a lot of ways that we really value this idea of individual agency and that the individual controls their own destiny. And I think there’s a lot of value in that, and I think we can all agree in the United States that that’s a wonderful thing to hold up – that we all can control our own future if we put our time, effort and think of it as investment into ourselves. So that’s terrific. On the other side of that, though, what it does is it can create this sense of, let’s say, individualism that’s in conflict with sharing information, money in a more communal way. Families share money, they share in money decision making, and you’ve got to talk about it – whether it’s at the dinner table or not – to get to a better place in your family. As you mentioned with younger-generation millennials – they get the value of it, they know they need to take control, they need to share and get that right information. And you can already see it in things like TikTok, where you see these payday videos being shared –let’s call it tens of millions of people sharing their money experiences because they get that by sharing those experiences, they’ll actually get to better money decisions. It’s a really exciting thing we’re seeing in the U.S.

Michael, we’ve been defining these issues here at a high level, but now I want to start drilling down into how to address these issues and, most importantly, what banks should be doing to help break down barriers here.

So what’s key for banks to do is really start transitioning from being more product-driven organizations to being more customer- and client-driven organizations, fulfillment-driven organizations where they first and foremost really understand and help their customers and clients track their money goals. That is critical. And in order to do that, you have to ask some really fundamental and tough questions like “What’s the number one job you want your money to do for you?” Those types of things, and gather that in very systematic ways. And think of this in databases so that then you can use that data to serve up content, ideas, suggestions and bite-sized chunks to human beings to really start thinking about how they can make the most of their money on their terms.

Let’s talk about these key things that banks should be doing. We’ll do it one at a time, starting with helping customers define their money goals. What sorts of help do they provide and how do they do it in a scalable way given that every customer’s situation is unique?

So when we think about helping customers with their money goals and doing it in a way that they feel unique, one key piece here is to let customers articulate their money goals in their own words, dollar amounts, time periods, time horizons, literally even in a system. We really need to tailor experiences to be extremely personalized, almost hyper-personalized, so that clients and customers feel that we know them, we understand them, and then what we need to do is take that information and transform it in a way that gives clients and customers a next-best suggestion as to what they could do to achieve those money goals and help them know whether they’re on track – whether that’s through information about their statistics, things like FICO score or things like their net worth, their portfolio performance, what’s helping them make progress or what might be holding them back. And ultimately we need to give them educational content to give them that information tailored to them to make more of their money. So it really is what I think of as the circle of life in terms of financial goals and education. The goal’s on their terms, giving them the information, those stats that help them track whether they’re doing well or not, and then ultimately information on what can get them to a better place. That’s what we need to be doing here.

Is all of this done digitally? It sounds like the things that you’re talking about there are things that would be kind of a mobile experience. So is it all done digitally or is there a role for the advisor, for the humans here to play as well?

It’s a brilliant question, and I would say I get this one a lot. It’s one of the questions I’m most asked as a, think of it as an advice and planning professional. When we think of digital and mobile, a lot of people think of it as it’s either digital/mobile or it’s human. It’s not an “and,” and what I would say is when you think of digital mobile, it should always be an “and” when it comes to humans as it applies to advice. So there are going to be things, great things that a digital environment can help support like keeping track of all those goals. So it’s almost as if you’re putting it down on paper, but instead you have access to it, in a dynamic way 24/7 on your phone. So all it’s doing is creating that convenience, that ability to personalize things in a very real-time ongoing way. But on the other side of it, there’s always going to be an off-ramp for human advice. There’s always something that AI, a digital property, it can’t provide, and a human is required, whether it’s a financial advisor, whether it’s a financial professional of some sort, that they’re going to need to step in and say, “Hey, we see that you have this need. We see that you have this concern. We see that you have this goal. Let’s talk about it.” Let’s talk about all the nuances that no system could ever capture so that we can see what trade-offs you should make to get you where you want to go.” So I always see digital and mobile as more of an engagement platform to get human beings together – clients and customers, financial professionals to collaborate on the same side of the table to help clients and customers make the most of their money on their terms in a sustainable way.

And it also brings up another question, which is we hear about banks as they think about the future of their branch system, that branches transform from a transaction place to an advice place for people. It sounds like this is consistent with that, and is that sort of how Wells Fargo is thinking about it in terms of how to incorporate more and more advice and make that available to your client base?

So I’m going to be a bit more agnostic than that. And what I’m going to say is some human beings just need to transact. There are moments, I just need to cash this check, or I just need to move money, or I need access to some type of information, and I know exactly what that is. And some humans need advice. They’re not sure exactly what they want to accomplish. They need to get into a bit more of a strategic conversation. And then there’s everything in between those two ideas. And so what we’re thinking of at Wells Fargo is how do we meet our clients and customers where they’re at, to your point in a bank branch, on a digital property, through a human interaction, really helping the client or customer get done what they need to get done on their terms 24/7. That’s our goal. And so to your point, advice is going to be an enormous component of that. And so when we think of what that means, I just want to be really agnostic. We want to design systems, ways of interacting with people’s money on their terms, not on ours. That’s what we’re trying to do at Wells Fargo.

The second thing that you mentioned on the list of that banks should be doing was helping customers with questions they should ask their parents or their other family members as part of the money talk. Share with us what some of those key questions are and how banks might be able to help position people to be able to ask those questions, given the taboo that you mentioned about money talk?

There are really three questions that we suggest in this context that younger customers, clients can collaboratively ask their parents. And this also leads to this idea of really diminishing that chance for a disruptive conversation and introducing the idea of a more structured approach to having a more productive one. So the first question is, and I would approach this in a very empathetic way with parents, is just ask them, “What do you want to accomplish with your money?” Because what this starts doing is helping you understand your parents’ intentions. So rather than approaching it as either what are you doing with your money or how much money do you have? That’s the important frame here is, what do you want to accomplish? And the implication here is that you want to support their intentions. The second question is, “Do you feel you have enough?” And this is when we see in our study, a lot of kids having consternation is whether their parents have enough or not to actually live out their lives in a way that’s productive, constructive, and will solve for all the healthcare needs, all the other issues that they might have in their life. So that, do you feel you have enough? And again, in a very empathetic and caring way is really critical, and what you’re doing is you’re putting an olive branch out that you’re willing to help, you’re willing to help navigate those decisions, find out what could be done to give them a better feeling about their money. And the last one is, “How can I help you achieve this?” And I’ve already alluded to this, but it’s really important to explicitly say that. Show that you’re really willing to partner with your parents and help them get to where they want to go. Because what parents typically are most concerned about is that kids are trying to take their control from them, and human beings want to be in control. That’s only human. And so what you’re trying to say is,” I want to keep you in control of your financial life as long as possible. How can I support that?” rather than a frame of I want to take control from you.

These first two recommendations that you’re making seem to be focused on getting the money conversation going. And the third one, which was providing information and education via the mobile device, this seems to be more about keeping that conversation going. So you already mentioned TikTok earlier, but what else should bankers be doing in that capacity?

So what bankers should be doing in that capacity is ensuring that they have a process to revisit their conversations with their customers and clients on an ongoing basis. You definitely need that systematic touch base, whether it’s every month, every quarter, every year. What are your ways to give your client or your customer a call and let them know you care? Just ask them how you’re doing. And then in that quarterly or annual discussion, really set up a half an hour, an hour, to have a more full meeting on how things are going. Has anything changed in their life, first of all? Second of all, whether they feel like they’re on track to accomplish their goals. The third thing is what you can do to help them get to a better place, whether that’s a new product, solution, service that you can offer, a decision that you can help them make. And the last one is, who’s on point then to implement that set of decisions or solutions so that you can make sure that everything is in its right place until your next meeting. That’s what I’d recommend or offer.

Michael Liersch from Wells Fargo Wealth and Investment Management, many thanks again for joining us on the BAI Banking Strategies Podcast.

Thank you for having me. I really appreciate it.