Adult Children Idealize Parents’ Financial Savvy, While Parents Quick to Point Out Mistakes Made By Children

Fidelity® Study Indicates Many Children Believe Parents Have Made Few Money Mistakes, Both Have Differing Views on Priorities

BOSTON – Fidelity Investments® today released the second report from its inaugural Intra-Family Generational Finance Study, revealing the top three money mistakes parents think their children have made and vice-versa. The study looked at financial conversations and dynamics within the family and indicated that adult children often put their parents on a financial pedestal, while parents are quick to point out their children’s debt as a key money mistake.

While the first report uncovered substantial communications gaps within families on critical topics, the second report focuses on the perceptions and priorities of parents and their children. Surprisingly, parents and their children perceive each other’s financial savvy much differently. In fact, nearly half (47 percent) of children said their parents had not made any financial mistakes, while only one-quarter (24 percent) of adult children said their parents did not save for retirement early enough and one-in-five (22 percent) said they saved money in the incorrect type of account. On the other hand, parents of adult children were quicker to point out the errors their children had made, including racking up credit card debt (42 percent), followed by not saving for retirement early enough (38 percent) and not building a large enough emergency fund (36 percent).

“As families continue to face economic pressure, they can share valuable experiences and insights to tackle key financial issues that impact their personal economy, such as saving for retirement and managing a household budget,” said Kathleen A. Murphy, president of Personal Investing at Fidelity Investments.

Different Financial Priorities Being Tackled By Parents and Children
Both parents and their adult children have different views on what their priorities should be and what financial issues they are currently trying to tackle. The study indicated that saving for retirement is the top issue that adult children are addressing at 86 percent, followed by paying off the mortgage (62 percent) and saving for a child’s education (44 percent). With many parents already in retirement, many (38 percent) said saving for retirement and their grandchild’s education (28 percent) were areas they are trying to tackle – while nearly a third (30 percent) of parents said they don’t face any financial issues.

The survey clearly demonstrated that concerns about financial matters are having a greater impact on children versus their parents. In fact, more than half (57 percent) of adult children worry about their financial future at least once a month or more, compared to only one-third (32 percent) of parents who say they worry that often.

“Financial education is so important and should begin in the home at a young age when parents and children can have conversations about basic savings habits. Parents can really help children by sharing with them how they are preparing for their retirement or saving for a child’s college education,” said Murphy. Having these conversations earlier can encourage positive savings behaviors with children and provide a better foundation for the conversations that will occur years later as parents transition into retirement. This is especially important in light of the volatile market conditions witnessed by children in the last five years and the impact it may have had on their views on saving and investing.

Resources Available to Help Families Facilitate Financial Discussions for Planning Ahead
To help parents and their adult children develop strategies to protect and pass on wealth between generations, increase peace of mind and help reduce anxiety, Fidelity has thousands of trained investment professionals to help investors make informed decisions about retirement planning. In addition, the Personal Economy web page on Fidelity.com has Conversation Starter tips on how to speak openly with people who care about topics like retirement planning, providing care for elderly parents and inheritance strategies. Fidelity also has published a Viewpoints article called “Communications Gap” that highlights a four step PREP plan on having conversations about money.

About the Study
The Fidelity Personal Economy Intra-Family Finance Generational study was conducted online among U.S. parents and their adult children by GfK Public Affairs and Corporate Communication using GfK’s KnowledgePanel® during the period of July 24 – August 29, 2012. To qualify, parents had to be at least 55 years of age, have an adult child older than 30 and have investible assets of at least $100,000. Their children qualified if they were at least 30 years of age, had money saved in an IRA, 401(k) or other investment account. In addition, they must have at least $10,000 saved.

For more information on the Intra-Family Generational Finance Study, an executive summary and infographics can be found on Fidelity.com.

About Fidelity Investments
Fidelity Investments is one of the world’s largest providers of financial services, with assets under administration of $3.9 trillion, including managed assets of $1.7 trillion, as of December 31, 2012. Founded in 1946, the firm is a leading provider of investment management, retirement planning, portfolio guidance, brokerage, benefits outsourcing and many other financial products and services to more than 20 million individuals and institutions, as well as through 5,000 financial intermediary firms. For more information about Fidelity Investments, visit www.fidelity.com.

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