Talk about the generation gap: When it comes to planning issues, retirement and wealth transfers, the disconnect between parents and their adult children appears to be getting worse, according to a new study.

Yet the same study found good news for financial advisors: Both parents (61%) and their adult children (57%) report they are more comfortable talking to a financial advisor than to one another about these sensitive issues.

Almost two-thirds of parents and their adult childrenwere out of sync on the issue of when when they should start talking about getting ready for retirement, elder care, estate planning and other critical financial topics, according to the latest Intra-Family Generational Finance Study from Fidelity Investments.

While parents would prefer to wait until after retirement, the study found their children want the conversations to take place well before their parents retire or experience health issues.

"It's a great opportunity for advisors," says Larry Sinsimer, senior vice president of practice management at Fidelity Financial Advisor Solutions. "They need to find a way to begin process of having a conversation. That's challenging, because it may not be natural to introduce the subject -- but advisors need to find a segue to talk about planning for the future with parents and children. They can even use this study as way to introduce the topic."

GAP IN UNDERSTANDING

To be sure, the gap between parents and adult children is considerable.

Adult children significantly underestimate the value of their parents' estate by more than $300,000, according to the study. This number more than doubled from just two years ago, when the estimate was off by more than $100,000 on average.

The study also revealed major split over who will care for a parent if they become ill. Nearly half oftheadult children (43%) say they expect that they or a sibling will need to handle caregiving duties, whereas only 6% of the parents expect their children would need to become caregivers.

What's more, while 56% of adult children say their parents often worry about financial security, only 23% of their parents actually do.

Even if conversations are taking place, the level of depth appears questionable.

For example, 40% of parents indicate they have not had detailed conversations with family members about covering living expenses in retirement -- and an additional 15% have not had any conversations at all. On health care and elder care expenses, 43% of parents indicate they have not had detailed conversations, and another 20% have not had any conversations.

And although parents are more likely to have discussed wills and estate planning with their children, nearly one-third failed to have detailed conversations -- and 10% have not had any conversations about the subject at all.

"Children want to have the conversations, but are reluctant for three reasons," says Sinsimer. "They don't want to seem like they're after their parents' money; they're afraid their parents haven't saved enough; and no one wants to face aging and mortality. It's a logical conversation but you can't ignore the emotional aspects."

'50 YEARS OF BAGGAGE'

"This is a very real issue, very problematic," agrees Greg Friedman, founder and chief executive of Private Ocean Wealth Management in San Rafael, Calif. "The vast minority -- maybe 10% -- of parents and children want to address these issues.

"The barriers run very deep," he adds -- "and it's particularly difficult because it's not a one-way conversation. You have to convince both the parents and the kids, and you may be dealing with 50 years of baggage."

What can advisors do?

Private Ocean tries to broach the subject in the discovery process with clients, Friedman says:

"We'll ask clients if they've thought about what their parents are doing, and open the conversation that way."

At Carnegie Investment Counsel in suburban Cleveland, advisors ask clients who else they should share account information with, reports Richard Alt, the firm's principal.

Advisors also urge clients to act sooner rather than later, Alt says. 'We tell them, you never know what will happen," he explains, "and there's never a bad time to communicate better. We say, 'You're not going to be smarter five years from now, so make the call now."

Wealth Access, a high-net-worth wealth management technology platform, offers clients "multi-generational wealth views" so all members of a family can share account information.

And its chief executive, David Benskin, says he is seeing more advisory firms redesign their offices with less formal, more comfortable rooms, softer chairs, candy jars and electronic fireplaces -- to offer clients a homier atmosphere to talk through planning issues.

7 TIPS FROM FIDELITY

Fidelity offers these suggestions for advisors:

1. Open the conversation with your clients. First, zero in on your clients' values. An advisor should find out what the clients want to achieve with their wealth and how they envision the rest of their life and the type of life that they want for their children or heirs.

2. Initiate family discussions early, and ask as many detailed questions as you can. On all subjects, the study shows that the earlier and the more detailed conversations are, the greater the sense of preparedness.

3. Follow the "voice not vote" rule for family discussions. While younger family members should have a role in the planning process, make sure the ultimate decisions made are consistent with the wishes of the parents, who are charting the course of their retirement.

4. Be appropriate: Have the right people talking about the right things, at the right time, in the right way. Advanced planning can help advisors define family members' roles, determine what conversations to have, and choose when and how different people will be involved. For example, who will have power of attorney or be the executor of your estate?

5. Commit to follow-up conversations to keep the dialogue going. These conversations are not "one and done." Keep the momentum going and schedule as many get-togethers as you need -- and revisit the plans you make at least annually, to make sure they still make sense.

6. Strengthen your core wealth transfer offering. Less than a third (28%) of advisors have generational wealth transfer as part of their core offering. A generational wealth transfer offering includes: helping clients educate children/heirs on managing wealth and engaging with those heirs at an early stage; educating clients on tax implications; and creating a comprehensive estate plan with clients.

7. Help clients facilitate family communication. Ask clients how they want to inform adult children of their retirement income and healthcare plans, and recommend that adult children participate in your client's periodic meetings with you. Advisors can also be creative in order to engage with the next generation -- consider hosting family meetings around philanthropy. And suggest to your clients creating starter accounts that each child or heir manages with an advisor -- potentially a younger advisor at the firm.

"Clients consolidate the number of advisors they have as they get older," Sinsimer says. "If an advisor isn't working on inter-generational transfers, clients will choose advisors who provide the most service." 

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