15 May Gifting
The impact of family gifting during the pandemic is wider than just the money.
According to a report issued by Legal & General, 5.5 million older family members expect to provide additional financial support as a direct result of the pandemic.
What is interesting that this is additional financial support covering day-to-day expenses for their adult children. More details show that 15% of parents expected to give an average of £353 in financial aid. This adds up to £1.9bn being gifted in the UK so far.
Whilst the sum of £353 may seem relatively small to clients of financial planners, this is an average and I suspect that your clients might well have been gifting more substantial sums to help in these tough times. So, could this impact your clients’ future financial planning? I would expect that your clients already have an unexpected events pot/emergency fund that would cover the £353! But it could have an impact if the sums being gifted are significantly more than that or if they continue over more years than expected.
Let’s not forget that there is likely to be an emotional impact as well; especially if those adult children keep asking for money or end up having to return to live in the family home.
‘the impact on parents on their adult children returning home to live with them should not be underestimated. Some of those adult children will have their own children with them too, creating emotional challenges for the grandparents, many of whom will have got used to living alone since their own children flew the nest.’
Research done by the Department of Social Policy, London School of Economics and Political Science and Institute for Social and Economic Research, University of Essex, and reported by the BBC in 2018 showed that the impact on parents on their adult children returning home to live with them should not be underestimated. Some of those adult children will have their own children with them too, creating emotional challenges for the grandparents, many of whom will have got used to living alone since their own children flew the nest. This may have been many years previously and the grandparents’ health may have changed since then.
Potentially there will be an additional financial impact on the grandparents here too, feeding their children and grandchildren and all being huddled together under one roof with nowhere to go. There might also be space issues to consider, with the need for multiple generations to live together, more noise, more washing and more untidiness in the house. All this can lead to your clients feeling strained and anxious which could affect their health (especially if they are not in good health to start with).
With schools now reopen in the UK there might be more anxiety for the grandparents. I know you’re going to say that there is only so much we can plan for, and you’d be right. However as the pandemic has progressed, have you ensured that you have had extra conversations about these issues?
Do you group and pre-identify questions in particular areas when you meet clients? These might include asking more detailed questions about their goals, values and relationships with family and other valued relationships. It might be helpful for you to create a family tree with your clients. This could include those people who are not blood-relatives but who are still regarded as family. Like me, they may have an auntie who isn’t really their auntie and who they might want to include in that important circle of people closest to them. It might also help you identify any concerns that your clients have about their children and respective partners’ relationships. All are great questions for the financial planning process.