Family communication: Financial planning’s growing blind spot

For decades, the financial services industry has focused on helping families prepare for the future. Yet one of the biggest risks facing families today may have less to do with financial products or planning strategies and more to do with something far simpler: communication.

Across key areas of retirement and protection planning, families are making assumptions instead of having conversations. This lack of communication can lead to significant gaps in financial preparedness.

New research from Lincoln Financial’s Consumer Sentiment Tracker found that adult children consistently overestimate the extent to which their parents have planned for key retirement and protection needs. For example, 60% of adult children believe their parents have a life insurance plan in place, while only 44% of parents say they actually do. Similarly, 55% of adult children believe their parents have a plan for age-related healthcare costs, while only 38% of parents say they do, according to the survey. The same disconnect exists around retirement funding and legacy planning.

Despite the disconnect, families are largely avoiding these discussions altogether. Of those surveyed, nearly 78% of families have not had in-depth conversations about life insurance, 78% have not discussed retirement income, 80% have not discussed healthcare costs and 77% have not discussed leaving money or assets behind.

For financial professionals, this disconnect represents both risk and opportunity. When assumptions replace conversations, even well-designed financial strategies can fall short during the moments families need them most.

The consequence of silence on families

The crux of the research shows that parents and adult children are in a communication stalemate.

Parents typically avoid discussions about life insurance, aging, healthcare or inheritance as they can be uncomfortable, and parents don’t want to burden their children, create anxiety or face their own mortality. On the other side, adult children are overly reliant on assuming plans are already in place, may not feel an urgency to ask or may even feel as though they are overstepping into territory that should not involve them.

This silence creates a hidden risk. When families don't discuss life insurance and broader financial plans, adult children may overestimate the protection available to them and misunderstand how assets, benefits or final expenses will be handled. Additionally, they may not fully be aware of the resources or plans available to support a surviving spouse or family member, fund future care needs, or preserve assets for future generations.

Without those conversations, expectations and reality are disconnected. This creates confusion and financial strain.

Here is where financial professionals can create meaningful value. By helping clients move from making assumptions to discussing facts, financial professionals can uncover planning gaps, align family expectations and strengthen the role life insurance plays within a family's broader financial strategy.

Six actions financial professionals can take now

The good news is that financial professionals can play an important role in helping clients and their families move from assumptions to conversations. Here are six ways to get started.

1. Start with aspirations, not assets. Families are often more comfortable talking about future experiences than financial products. Encourage clients to share what they envision for their retirement years, the people they hope to support and the legacy they want to leave behind. By framing the conversation around goals instead of account balances, financial professionals can help families engage in discussions they might otherwise avoid.
2. Ask about family alignment. Instead of focusing solely on policy ownership or coverage levels, ask clients whether their adult children are aware of and understand the plans. A client may feel prepared, but family members may be in the dark or have a very different perception of the situation.
3. Make communication part of the planning process. Encourage clients to view family conversations as an essential component of financial planning. The goal is not to disclose every detail, but to create clarity around priorities, expectations and responsibilities.
4. Review existing coverage through a family lens. When evaluating life insurance coverage, discuss not only the client’s goals but how the beneficiaries and family members would navigate the outcome. Understanding how protection strategies affect multiple generations can lead to more informed decisions.
5. Create opportunities for multi-generational discussions. For appropriate clients, consider facilitating family meetings or incorporating adult children into select planning conversations. These discussions can help reduce misunderstandings and ensure important information is shared before a triggering event occurs.
6. Start earlier than clients think necessary. The best time for a conversation about life insurance, healthcare costs or legacy intentions is before anyone feels urgency. Early discussions tend to be less emotional, more productive and more actionable. Encourage clients to keep the discussion going. At a minimum, unless a major life event occurs, families should reconnect on this conversation annually.

The opportunity for financial professionals

When parents and adult children are working from the same set of expectations, families are better positioned to make informed decisions, avoid misunderstandings and ensure that one’s intentions are met.

Financial professionals are uniquely positioned to bridge that gap.

By encouraging open dialogue, clarifying expectations and bringing multiple generations into the planning process, financial professionals can help families move from assumption to understanding, and from uncertainty to preparedness.

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