Here’s a question: When you name someone as a beneficiary on an account, do you let them know? If so, when do you have a conversation with them—before or after you fill out the paperwork? Or do you just check it off your list and move on?
What about this: If someone named you as a beneficiary, would you want to know? Would you want to talk about it? What information would you like to have? What questions might you ask?
These questions matter, because your beneficiaries aren’t just a name on a line. They are the most important people in your life. They are the people responsible for carrying out your wishes. And they are people who probably want to talk about expectations and the impact being named will have on their lives. Yet, we often step over those conversations and just put our plans in place.
Research from The Generations ProjectSM found that 76% of the next generation wants to be informed when they are named as a beneficiary, yet only 35% of the senior generation says they feel a need to talk to the person they are naming.1 This gap is an opportunity for conversation.
Here are 5 reasons to talk to someone about naming them as a beneficiary.
1. Communicate your wishes
A beneficiary is a central part of your planning efforts. And naming them embodies your wishes for them and the future. By talking about naming them, you can create a shared understanding about your intentions and their potential role. You also give them more peace of mind, because they don’t have to wonder about what you are doing and hoping they will do. Here's what that could sound like, “I’m hoping we can talk about my plans, so you know what I have in mind from naming you as a beneficiary.”
2. Give them voice
Being a beneficiary has an impact on their life, so they should have a voice in the process. That doesn’t mean they should have a vote—it just means you should invite them to share their interests and possible concerns. Having input gives them a chance to be involved and sets you up to make more-informed decisions in your planning process. It sounds like, “I am thinking about naming you as a beneficiary on this account, and I want you to have voice in the process. Let’s find time to talk about what this might mean for you.”
3. Build skills as a family
Your beneficiaries are likely the people closest to you. That means talking about naming them is an opportunity to practice open dialogue where they feel heard and valued. It can also prepare you for more complex planning conversations in the future. It sounds like, “I’m not sure how to start this conversation, but let’s just view it as practice. I’d like to talk about what it means for you to be named as a beneficiary. I’ll start and then you ask me questions.”
4. Open the door to co-planning
Talking to your beneficiaries can help you explore how you might plan for the future together. It’s a natural door into conversations about co-planning and co-creating around wealth decisions. From talking about wealth transfers to charitable giving, powers of attorney, paying for later-in-life care, or how you will spend time together in the future, beneficiary conversations are a good place to begin. It sounds like, “What would you like to know about my planning that would be helpful as you think about being a beneficiary?”
5. Strengthen relationships
How you approach naming a beneficiary can create more closeness or distance in your relationships. Treating it as just a functional item to get off the list doesn’t build a planning connection with the people you name. But treating it as a decision that impacts someone’s life and future—and acknowledging that to them—can build trust and a sense of togetherness. It sounds like, “I want to share my thinking behind these decisions and hear about your financial goals and wishes. This way, we can make sure these plans reflect what matters to both of us.”
Make beneficiaries a "today" conversation
It’s easy to default to thinking that naming a beneficiary will matter “someday.” When we project the role into the future, we tend to push conversations about it into the future as well. But there are lots of conversations we can have with our beneficiaries today. We can start with just saying, “You are named as a beneficiary. What would you like to know about my planning?”
Your beneficiaries are partners in your financial journey. By initiating these important conversations today, you set your family up for a shared planning process and seamless future transition.
About the Fidelity Center for Family Engagement
The Fidelity Center for Family Engagement (FCFE) envisions a world where families grow closer together as they navigate their financial lives. FCFE empowers families to talk about the emotional and relational aspects of their generational planning. The Center's team delivers "how to" guidance through coaching, live events, research, videos, and articles that help families transform their planning journey one conversation at a time.