As the definition of family has evolved, it's important that financial institutions develop products and services that meet the changing needs of the modern family.
The first hurdle may be one of perception. According to a UBS Investor Watch, "Beyond the Picket Fence: Financial Challenges of the Modern American Family," many of today's families including households without children, same-sex couples, blended families with children from a prior marriage, the contemporary mix multigenerational families (aging parents or adult children living at home) and older, first-time parents, feel that financial guidance is skewed toward "traditional families."
More than 71% of investors polled by UBS believe that support system on which modern families depend to achieve their financial aims — Social Security, health care and retirement benefits — have not caught up with their needs.
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Like having more money in the till, more than four in 10 of parents in blended families say they've underestimated the cost of raising children from multiple marriages. Many of these parents also never anticipated the emotional toll child-rearing would have on their lives.
"Two-thirds of parents with children from former marriages feel frustrated that they cannot raise their spouse's children the same way they raise their own," the survey notes. "Sixty-three percent say their spouse's children don't accept them."
Their frustrations don't end there. When asked how complicated their lives are on the basis of four criteria — their lives overall, finances, retirement planning and filing taxes — solid majorities of parents in blended families describe each of the four as at least "somewhat complicated."
In addition, the percentages of respondents who describe each of the criteria as at least "somewhat complicated" is higher among blended families with children at home than among their traditional counterparts.
My life overall: 55% (blended families) vs. 45% (traditional families)
Finances: 55% vs. 44%
Retirement planning: 64% vs. 54%
Filing taxes: 53% vs. 46%
Financial issues extend to other domains for families living off the beaten path as highlighted in the UBS survey charts on the next page:
As this chart shows, higher percentages of blended families with children than traditional families are dealing with knotty inheritance planning issues. Most glaringly, two-thirds of blended families (67%) are uncertain how to pass on their wealth.
Not surprisingly, blended families who plan for their future are more confident about their ability to achieve certain financial goals. Topping the list is funding college education for their children and grandchildren.
The landmark Supreme Court ruling this year legalizing marriage for same-sex couples in all 50 states avails the LGBT community of the same protections and privileges under Federal law as enjoyed by heterosexual couples. But the ruling has raised within the LGBT community a host of questions — from income taxes to wealth transfer. As this chart shows, most same-sex couples want advice customized to their financial situation.
For multigenerational families, jugging financial priorities is an ever-present challenge. More aging parents are moving back in with their adult children for support; and more adult children unable to support themselves are living at home. The added expense of caring for additional family members, as this chart shows, is complicating retirement planning for those involved.
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