The Challenges of Modern Planning

Love Family Money

The financial professional’s role in modern family financial dynamics

by Katie Libbe

Ms. Libbe is vice president of Consumer Marketing and Solutions for Allianz Life Insurance Company of North America (Allianz Life®). In this role, she is responsible for leading retirement income strategy and consumer education. Connect with her by e-mail:

The anatomy of the American family is changing. Today, fewer than 20 percent of U.S. households fit the “traditional” mold of a married heterosexual couple living with at least one child. Compare that to 1970, when traditional families comprised 40 percent of households (U.S. Census Bureau, “America’s Families and Living Arrangements: 2012”, August 2013).

As the structure of the family shifts from traditional to dynamic – such as single parents, same-sex couples, blended families and others, financial relationships are shifting as well.

This shift in family structure opens up opportunities for financial professionals to know their clients better and anticipate possible financial planning needs that today’s families have. It also creates a demand for financial professionals to adjust their business practices in order to stay relevant.

Structure & Dynamics of Today’s Families

In the Allianz LoveFamilyMoney Study*, we explored the structures of today’s families and the unique dynamics that shape their relationship with money. We questioned 4,500 Americans who identified themselves as either a member of a traditional family or part of a modern family. Modern families include those who are:

  • Multi-generational family members living under one roof,
  • Led by a single parent,
  • Same-sex couples with and without children,
  • Couples who have one or more children from previous relationships living at home,
  • Parents who had children later in life,
  • Boomerang families, where at least one adult child has returned to live at home.

The respondents told us about their financial situation along with their goals and fears. The majority of respondents labeled themselves as middle class. In order to be included in the study, all participants had annual household incomes of $50,000 or more. More than 1,600 respondents reported incomes greater than $100,000.

Yet despite the level of financial security that middle-class status typically implies, we found that modern families were struggling in ways never seen before: more than half (57 percent) said they were “making ends meet” (at best) or that they were “poor” (at worst).

Furthermore, modern families reported much higher rates of disruptions in their income. Thirty-five percent said they have unexpectedly lost a main source of income, compared to 23 percent of traditional families. Modern families also reported bankruptcy, and long-term or short-term disability at rates nearly double those reported by traditional families.

Today’s Family Challenge

Clearly, the unique challenges facing modern families can add a layer of difficulty when you sit down with your clients to help create a successful financial strategy. Imagine the daily reality for a single mother who strives to save for retirement and her children’s college education, all while paying for household expenses single-handedly. Financial professionals may also run into a boomerang family when their older couple clients, who are on track with their retirement, suddenly need to assist an adult child who moves back home after losing a job, dumping their expenses on their doorstep.

Complicated situations like these are common and can turn planning for the future into an ordeal for modern families. But complex family bonds don’t have to translate into an unsuccessful financial future. Financial professionals have a more important role than ever to help modern families sort out their finances and successfully plan for the future.

First, financial professionals need to understand how modern families’ relationships with money differ from those of traditional customers.

In our study, modern families identified one of their worst financial habits as failing to save money. More than half said they were not saving enough – and that includes 25 percent who reported that they weren’t saving anything. By comparison, 20 percent of traditional families reported that they were unable to save money.

despite the level of financial security that middle-class status typically implies, we found that modern families were struggling in ways never seen before

Perhaps the most alarming finding, and one where financial professionals can be a key partner in helping their clients, is the modern family’s average retirement savings. Traditional families reported an average of $251,100 in retirement savings, whereas modern families reported an average of $196,800.
Despite experiencing financial struggles and having a lower level of savings, fewer modern families sought the help of a financial professional compared to traditional families.

What’s more, modern families who have never used a financial professional have less household savings and investable assets, on average, than those who have used a financial professional. Only 43 percent of modern families reported using a financial professional at some point in their lives, a rate that’s 10 percentage points lower than traditional families.

Instead, modern families responded that they were more likely to turn to friends, family or acquaintances for guidance. Perhaps this is because they believe friends and family understand their unique and complicated situations – while they might think a financial professional would try to confine them in the mold of the traditional family.

Knowing that modern families turn to those closest to them for financial guidance, empathy will create a strong connection for financial professionals as they help today’s families. By understanding and embracing shifts in family structure, financial professionals can see new possibilities for their business.
The good news beyond all this opportunity? Many modern families are open to working with a financial professional. More than half of modern families who had never consulted a professional said they would consider doing so in the future. Specifically, about one-third said they’d be interested in receiving help with planning and managing their retirement account. Thirty percent also said they would be open to set up a savings plan.

The Advisor Advantage

Modern families who said they had used a financial professional were better off than their peers, according to the study. They had more retirement savings than those who had not worked with a financial professional and they reported that financial professionals helped relieve the pressure of planning on their own. Modern families who have used a financial professional also report higher financial security than those who never used a financial professional.

As you sit down with your modern family clients, here are some quick tips clients should consider:
1. Create a strong financial foundation – take inventory of their current financial situation, create an emergency fund (ideally 6 months of living expenses) and pay off debt.
2. Clarify their financial savings goals – define their short and long terms goals, document their financial concerns and establish how they can start saving for their goals.
3. Explore employer guidance – are there savings vehicles or help that employers can supply?

For many modern families estate planning is complex. When clients come to you seeking help, partner with another specialized professional, such as an estate attorney and a tax advisor. They can help with common issues including:

  • Creating legal documents such as wills trusts, power of attorney, beneficiary designations and gifting of property.
  • Defining filing strategies, deductions and itemizing dependents.

As an industry, we have an ever-growing opportunity to help guide Americans on a path to financial security, and this study provides important insights toward that effort. By understanding the dynamic structure and relationships of the modern family, financial professionals can help these new clients meet their financial goals. Financial professionals who can adapt their practices for the needs of today’s families will make a difference for their clients as they work to create a strong financial future.





* The Allianz LoveFamilyMoney Study was conducted by The Futures Company via an online panel in January, 2014 with more than 4,500 panel respondents ages 35-65 with a household income of $50K+ and was commissioned by Allianz.