There’s a huge wealth transfer coming to the next generation -- more than $84 trillion through 2045, most of which ($53 trillion) is represented by transfers from the baby boomer generation, according to Cerulli Associates, an international research and consulting firm, (tinyurl.com/nhbrsdd3). Cerulli estimates that $72.6 trillion will transfer to heirs and $11.9 trillion to charities.

No matter the size of a potential inheritance, there is no question that the subject can be not only sensitive, but also emotionally charged. Dealing with the loss of a parent is stressful in and of itself. But I can tell you from 30 years of personal experience working with families, there is more.

There is the interplay between siblings and other family members; the learning that needs to take place when dealing with handling estates, perhaps for the first time; the emotional strain of personal grief; the possibility of discovering something new or surprising about a parent’s wishes; and vulnerability due to lack of knowledge of wills, trusts and finances.

That’s not all. More than 1,000 individuals with at least $3 million in investable assets who participated in the recent Bank of America Private Bank Study of Wealthy Americans (tinyurl.com/yma3bnuf) shared theses stress points: unequal distribution of assets; lack of clear instructions and documentation; lack of trust/transparency in an executor or trustee; lack of communication; and the most common reason reported -- interpersonal family dynamics (59% of respondents).

The good news is that these matters can be addressed in advance. Communication is key. In working with clients and their families during vulnerable times, I see what works and what doesn’t, and it all turns on how families communicate.

Cerulli Associates recommends “making family events a regular part of the advisory process” to improve relationships between generations (tinyurl.com/nhbrsdd3). According to Cerulli’s 2021 report on wealth transfer, “family meetings and regular communication (81%) is considered the most-effective wealth transfer planning strategy by [high-net-worth] practices, followed by educational support (59%) and organized succession planning (31%).”

Further, “extending interfamily relationships to involve the entire range of stakeholders rather than just the current controllers of that wealth will create a greater sense of responsibility and inclusion among heirs.”

In some cases, parents discuss their own personal finances with their children as well as their legacy interests, and in others, they don’t. (If you are on the fence about monetary disclosure, keep in mind that once that door is opened, you can’t close it.)

In my experience, those families that succeed in sharing information have children who are financially and emotionally comfortable themselves.

Beyond frequent and effective communication with heirs, implementing a plan and making necessary adjustments are also key. Unfortunately, only a fraction of wealthy Americans seems to agree.

Less than half of those surveyed by Bank of America have the basics of estate planning in place, despite their wealth. (“Basics” is defined as including a will, living will/or advanced healthcare directive and a durable power of attorney). This includes 54% of those who are 44 or older.

Also, only 29% of respondents reported that an estate should be updated at regular intervals (i.e., annually). More popular reasons to update an estate plan were tax law changes (38%); significant changes in wealth (35%); and a life event, such as a birth, marriage or divorce in the family (34%). In other words, it is more popular for the wealthy to be reactionary with estate plans than to be strategic.

If you are in the group that will be handing down money to heirs, being strategic is a must in both your planning and in your communication. As Benjamin Franklin said, “An investment in knowledge pays the best interest.” Knowledge must be passed down along with wealth.

DISTRIBUTED BY ANDREWS MCMEEL SYNDICATION

The oldest Generation Xers (those born between 1965 and 1980) are turning 60 next year. If you're one of them, you'll have a lot to think about since retirement is on the near horizon. Are you prepared?

That's a question studied by Natixis Investment Managers and presented in a new report titled "Natixis Global Survey of Individual Investors" (tinyurl.com/3nhv4ssv). The survey of 8,550 individual investors in 23 countries pointed out some challenges facing this demographic.

Most (82%) Gen Xers surveyed understood that "it is increasingly their responsibility to fund retirement on their own."

Feeling that responsibility should lead to educating oneself -- the sooner, the better -- and worrying about certain things is not a bad place to start.

It turns out that 48% of those surveyed said they were worried they won't have saved enough to enjoy their retirement. Forty-one percent said inflation "is killing my dreams of retirement" (a subject I discussed in a recent column titled "Is Inflation Affecting Savings Rates" -- email me at readers@juliejason.com if you would like a copy).

Thirty-seven percent were worried that their government benefits would be cut. Thirty-one percent said they would never save enough to retire (19% of those surveyed said that even if they saved $1 million, they still couldn't afford to retire).

To me, those worries are healthy and realistic. But this observation is not: expecting long-term returns of 13% above inflation. That's hardly a good figure to use for planning purposes. Here is another misconception: 61% of Generation X investors think index funds are "less risky," and 67% think index funds "are going to protect them on the downside," but "[i]nvestors forget that index funds deliver market returns."

Just think of the bear markets we've experienced. The coronavirus bear market saw a quick decline of 34% in just over a month. And Generation X has experienced some interesting investing times, described as a "25-year bust and boom cycle" by the Natixis report, which cited the tech bubble burst in 2000, the global financial crisis of 2007-2008, and "a decade-long bull cycle that pushed markets to record highs."

This is where it might help to retain financial expertise. And, indeed, 56% of Gen Xers were "convinced they need[ed] professional advice on topics ranging from achieving broad financial planning goals to more specific retirement income plans."

An appropriate retirement expert might help them realize that the most important risk to consider is the risk of not meeting their retirement goals. (Only 11% of those surveyed reached that conclusion, while more respondents defined risk in terms of volatility (25%) and losing wealth (23%).)

Volatility would also be considered, but probably in a different way. We all have to be aware that financial markets have an ebb and flow. Each and every year, even in up years in the market, we experience intra-year declines. Those have to be factored into the equation, as well as bear markets that take time to recover.

While 62% of respondents said they were comfortable taking on risk (which I interpret as risk of loss) to get ahead, 72% also said that, if forced, they would choose safety over investment performance, and 47% indicated they were taking on more risk than they should to get ahead.

That's indicative of mistaken beliefs about how retirement portfolios need to be structured to meet the goal of preserving your lifestyle and, in the right circumstances, perhaps leaving a legacy.

If you are a member of Generation X (the youngest in this category turn 45 in 2025), are your goals and plans in place?

One final point: "Almost half of Gen Xers surveyed (48%) [said] it's going to take a miracle to retire." You don't need a miracle. Just some preparation.

DISTRIBUTED BY ANDREWS MCMEEL SYNDICATION

Are you considering investing in the stock market for the first time, but are hesitating? If you are serious about taking the plunge, think of your situation in terms of behavior change. That is, think of what it takes to go from being an outside observer to an actual newbie "investor."

Behavior change works in stages. The Transtheoretical Model of Behavioral Change (TTM), developed in the late 1970s to describe the "process of intentional behavioral change," can be a guide. (Abstract available at tinyurl.com/yc6tu2sp.)

According to the authors of the study, TTM consists of six stages: "precontemplation, contemplation, preparation, action, maintenance and termination."

Stages can be applied to the hesitant future investor as well. "The New Investor Roadmap," part of the recently released report by the FINRA Investor Education Foundation and Commonwealth titled "Exploring the Stages of the New Investor Journey: Actionable Insights for Industry Stakeholders" (tinyurl.com/mpwxrc9p), does just that. Commonwealth is a national nonprofit building financial security and opportunity for financially vulnerable people through innovation and partnerships. FINRA's foundation provides educational programs and research to help consumers reach their financial goals (tinyurl.com/bdhn96xj).

The New Investor Roadmap identifies four stages: Contemplating; Starting; Engaging and Integrating. As we talk about each stage, see if you can identify where you are in the process.

In Contemplating, one starts "to weigh the benefits, barriers and risks." The length of the contemplating stage can vary, as people consider "whether investing is right for them." This stage can last "anywhere from weeks to years."

Contemplating is a time for gathering information: "Networks, such as family and friends, can help determine how long new investors remain in the Contemplating stage." Also, "Trusted representatives of financial institutions within local communities can help [people] gain awareness and knowledge about investing."

The Starting stage comes next, where "potential investors transition from contemplating to actually opening an account and making their first investment." These newbie investors consider financial basics: "How much to invest, where to invest and risk tolerance."

Making decisions on investments "can be influenced by how easy or difficult products are to understand." Also, investors "are in search of others with similar goals and experiences, including looking toward friends and family for support."

At the third stage, Engaging, these new investors become "more familiar with how investing works" through gaining experience and knowledge.

Now, there is continued learning and self-discovery based on how their investment decisions are playing out. Educational resources (newsletters, webinars, interactive tools) remain important as investors seek to expand their knowledge so they can reach their investment goals and minimize their losses.

In the fourth stage, Integrating, investors "no longer desire to constantly engage with their investment accounts" and "are now in a position to start exploring whether different investment opportunities would align with their objectives and risk tolerance."

Within their personal networks, new investors "recognize the value of accurate information and seek this from trusted professional sources, rather than from family or friends." In addition, "they start sharing their knowledge with family and friends."

Seeing things in stages of behavioral change can help with "an investor's journey, from the first time they learn about investing through becoming a knowledgeable and confident investor," according to the report.

Before leaving this subject, be sure to take advantage of tools and guidance from regulators. FINRA, which oversees the U.S. broker-dealer industry, provides helpful information about investing basics and other subjects at tinyurl.com/muyuj33k. The U.S. Securities and Exchange Commission, the federal regulator of the financial industry, also provides resources on its Investor.gov website. See Introduction to Investing (tinyurl.com/3fkbnker).

If you are thinking about becoming an investor, send me questions I can answer in this column (readers@juliejason.com).

DISTRIBUTED BY ANDREWS MCMEEL SYNDICATION