NEW YORK (TheStreet) -- The best way for a typical U.S. family to prepare for their financial future is to realize that there is no such thing as a typical U.S. family.

UBS Wealth Management Americas (WMA) recently issued a report revealing that among high-net-worth investors, blended families, same-sex families and multi-generational families make up about 34% of all investors. That is just about the same percentage as “traditional” families -- including a heterosexual couple with children (35%). The survey of 2,715 high-net-worth (HNW) and affluent U.S. investors also found that the “traditional” demographic is decreasing by generation. It comprises 46% of the World War II generation, 37% of Baby Boomers and only 25% of Millennials. Even worse, seven out of ten investors feel that financial advisors and the advice they dole out has only the traditional family in mind.

"It's important for the financial industry to start addressing the complexities of modern families," said Paula Polito, client strategy officer at UBS Wealth Management Americas. "There is a real opportunity to respond to the rapidly and dramatically changing family dynamics in modern America."

According to the advisors we spoke with, blended families – those with children from a prior relationship – face huge financial obstacles and pose enormous challenges to advisors who haven't had experience with them. Blended families represent 14% of the high net worth and affluent investor population, and experience heightened financial and emotional challenges relative to traditional families. The UBS survey found that overall blended families (55%) feel they lead more complicated lives compared to traditional families (48%) and more so when it comes to their finances (55% vs. 44%) and retirement planning (64% vs. 54%).

Within blended families, 44% of wealthy investors say they underestimated the true cost of supporting more children. That doesn't exactly soothe the sting of 63% of investors who admitted that their spouse’s children do not completely accept them. As a result, it can be especially difficult for blended families to consider their estate planning. The UBS survey found that 67% of blended families don't know how they will divide their assets, compared to half of those in traditional families.

“Many times, the interests of the children from the first marriage and those from the second and third may not be aligned,” says Dan Yu, managing principal of Eisner Amper Wealth Advisors. “In those instances, when you're drafting the document and divvying the assets after the divorce, you make it quite clear what percentage goes to the children from that first marriage. For the second and third marriages, the distribution of those assets could be handled through a trust or through the will process.”

That's if a family can even bring itself to have that discussion. Just 50% of blended families have open conversations about estate planning, compared to 65% of traditional families. Then again, their estate planning sessions have far more potential for volatility: 31% of blended family investors report conflicts among potential heirs, compared to 12% of traditional families.

“You typically need to have a conversation with the son or the daughter, but now you have conversations with grandchildren who are in their early to mid-20s and, quite frankly, never dealt with that amount of money before,” says Dan Yu, managing principal of Eisner Amper Wealth Advisors. “The education process is where you see the transfer start to begin.”

Life after same-sex marriage...


Same-sex couples in the U.S. are facing their own financial challenges after the Supreme Court guaranteed their right to marry in June. Seven out of ten same-sex families told UBS that their lives have been changed as a result of the ruling. Meanwhile, half feel the decision will positively impact their personal life, especially when it comes to the extension of certain health and retirement benefits, while 42% believe it will benefit their career.

That said, 60% of same-sex couples feel that there is not enough financial guidance for families like theirs. They believe that advisors and support systems including Social Security aren't built with their type of of family, with 72% actively seeking guidance to understand how the legalization of same-sex marriage affects their benefits.

“While the recent landmark Supreme Court ruling legalized same-sex marriage and guaranteed benefits, same-sex couples are a long way from being financially worry-free,” says Sameer Aurora, head of client strategy for UBS Wealth Management Americas. "Same-sex couples are attempting to translate what the ruling really means for them, their benefits and their financial situation, making financial planning that much more critical.”

That includes estate planning. A quarter (25%) of same sex couples do not feel accepted by their parents and believe their inheritance was, or could be, affected by their sexual orientation. In addition, their own legacy planning introduces conflict among potential heirs. Aurora notes that this makes it incumbent upon advisors to learn as much about their clients as they can during the earliest stages of their relationship.

"I think some of it is clearly education to the extent that advisors are sensitized to the fact that different family types have different needs because of their family situation,” Aurora says. “It's incumbent upon the advisor to do the right kind of discovery, but it's also up to the advisor to bring the right planning orientation to the table. The advisor should be engaging on a personal family level, because those family dynamics are going to be driving their finances in one way or another.”

The multi-generational solution...


Multi-generational families represent have offered a way forward for both advisors and other clients in non-traditional families. UBS surveys have found that that more adult children and aging parents are sharing homes. Families with adult children still in the home, more than half worry about maintaining their current financial situation (53%). They are also less confident about reaching financial objectives (70% highly confident vs. 79%) and more worried about affording healthcare in their old age (61% worried vs. 44%).

“When you look from Generation 1 to Generation 2 and the patriarchs are getting older, that transition has been something that I've been dealing with for the last six or seven years as my core clients mature and they get into their late 70s or early 80s,” says Dan Yu, managing principal of Eisner Amper Wealth Advisors. “A transfer of wealth during life or at death requires some education. If you're planning for a 75-year-old, you may have 50% to 70% of your money conservatively invested, but if you're planning for the 40- to 50-year-old and then the generation behind it, it looks vastly different.”

Families living with aging parents find themselves having a harder time balancing the financial needs of everyone in their family and being able to retire on their own timeline. Some 56% said that retirement planning is at least “somewhat complicated” for them, compared to 42% of families living without an aging parent. This is where Chris Detmer, a financial advisor with RBC Wealth Managment, says a summit meeting about family finances can come in handy.

”I'm almost 30 years in, and what we've found to be most imperative when dealing with our clients is to go the distance to incorporate all of the generations of the family that we can possibly get to,” Detmer says. “We know that you most likely have a generation above you or below you and we stress the importance of bringing all of those family members together to do some holistic first conversation and make sure there is transparency among all the different individuals, their financial needs and their philosophies. The communication does all the heavy lifting.”

By getting everyone in a room together and discussing their financial goals over lunch, Detmer and business partner Aaron Brachman, senior financial associate for RBC Wealth Management, say it's easier to get families to unpack their individual baggage and determine their needs going forward. Advisors can then address the family's concerns based on that communication. While Detmer notes that confidentiality and pride can get in the way if a family member prefers keeping finances close to the vest or feels embarrassed about asking for financial resources in later years, a family that deals specifically with a multi-generational advisor will likely come away with at least some idea of what their future will look like.

“How many families do you know that fit inside of a box?” Brachman says. “Every family has different goals and different personalities, and no family has a standard approach.”

But how do evolving families find someone to meet their needs? The effort needs to come from both sides. Families can start by looking for advisors who address their family's specific needs in their mission statement and by seeking certified financial planners whose interests stretch beyond investment. However, UBS's Aurora notes that it's also up to advisors to take an active interest in their clients' lives and pay attention to a client's family circumstances as they change.

“We used to say internally and informally that, as an advisor, you want to be the second call the client makes,” Aurora says. “When something important happens in a client's life -- like a new job, a career change, pregnancy, relocation -- you want to be in that inner circle and be the second call after the first call goes to their significant other. As a client and their family goes through ups and downs and changes, you will be the constant in their life.”

This article is commentary by an independent contributor. At the time of publication, the author held TK positions in the stocks mentioned.

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