The Silver Tsunami is no longer a vague threat lurking out at sea. It began slamming into shore in 2011, when the baby boomers started turning 65, and has been shaking the foundations of retirement planning ever since. Boomers swept up in this demographic shift have experienced significant changes in their relationships with those around them, including their families and their advisors. Many boomers now find themselves in the unfamiliar role of providing financial and emotional support for both aging parents and children struggling to achieve financial independence.
Nearly half of Americans in their 40s and 50s (47 percent) have a parent age 65 or older and are either raising young children or supporting a grown child, according to a study released last year by Pew Research. Approximately 15 percent are providing financial support to both an aging parent and a child.
As these pressures mount, many boomers are increasingly turning to their advisors for support — and it isn't limited to financial advice.
"I have conversations with clients about the (challenges) of being in the sandwich generation almost on a daily basis," says Thomas Froehlich, president and CEO of Froehlich Financial Group in Spring Lake Heights, N.J. "Most of my clients are in their 50s, and that's the age when we're all faced with it. You've got the kids' college, you have your parents and between all of that you've got to worry about your own retirement. 'Will I be able to retire? How long will my money last? What's my lifestyle going to be like?' It's very challenging."
And he should know. He experienced it firsthand.
Building experience the hard way
Froehlich's mother got sick first. She was living in the two-story house where he grew up, which was slowly falling into disrepair. Froehlich and his siblings sold the house, pooled their money and bought a mother/daughter property where his sister and her husband moved in with their mother and took on the caregiving role. They agreed that Froehlich, who had twin teenage boys at home, would take care of the money management side of things due to his professional background. Watching his sister and her husband care for his mother gave Froehlich a whole new respect for them and others in that position. "That's one of the most stressful things on a marriage that you could deal with," he says. "It's hard enough to be married and maintain a strong relationship while working, raising kids and everything else going on. And if you're the spouse, it's not even your mother. I told my brother-in-law, I will love and respect him forever for the work he did for my mom."
Several years after his mother passed away, his father, who lived in Florida with Froelich's stepmom, became ill.
"So now I'm flying up and back and dad gets worse and worse and eventually he's in hospice. He was in hospice for about three weeks. It wasn't financially devastating for me since I own my own company and I can bring a laptop and phone and work from wherever. But imagine if it was someone who had a real job. How do you take off time and go sit with your dad every day while he expires?"
Beyond the logistics and financial hardships, Froelich also recalls the emotional toll the process took on him. "Personally, it's a very, very tough experience to watch somebody you love wither away and die," Froehlich says.
Looking back, he believes these experiences have helped him better understand how to help clients who are going through similar trials.
"Advisors have to have empathy; they have to be caring and giving people," he says. "Because it's not only about the money. And if it is only about the money, I think they're in the wrong business. And it comes across that way to the client, I guarantee it."
The light of understanding
"I think advisors really have to know their clients in a different way than they've ever done before," says Lisa Gray, founder and managing member of Graymatter Strategies LLC, a consultancy in Richmond, Va. for families and their advisors.
In addition to providing traditional financial advice, she says, boomer clients are now relying more heavily on their advisor for emotional support. Advisors "need to learn to listen much better, instead of just touting their firm's credentials or capabilities." Advisors who don't understand generational views of the world and the dynamics of each family are "functioning in the dark," Gray says. She recommends that advisors take the time to understand how retirees are looking at the rest of their lives and what younger people may be expecting from their parents.
A recent study of single-family offices by the Wharton Global Family Alliance cites non-financial components as one of the key drivers of wealth performance. "If you have a family that's disagreeing among themselves, they're going to have difficulty making important decisions about investments," Gray says. "But when you have consensus and engagement, they're going to make much better decisions and they're going to be a much better client for you as an advisor."
When family relationships combine with finances, a wide variety of issues and tensions can arise, Gray says. Battles for control and power plays within the family dynamic can be particularly damaging, she notes, and it's important that advisors help their clients navigate these potentially volatile areas.
