WSJ Sunday Smartmoney Preview; How To Be Your Brother’s Banker (And Not Fight Like Kids)

BYMISSY SULLIVAN

When Greig Detering left behind his comfortable life as a telecom engineer and set out to do missionary work abroad, he had a powerful calling-but not a lot of financial firepower. He lost most of his nest egg in 2002, he says, when his employer's stock dropped to $2 a share from $83 a share.

F o r t u nately, his fledgling ministry found a steadfast benefactor who kicked in $5,000 to $20,000 annually for several crucial years-to help support his evangelistic efforts across more than a dozen countries. And when Mr. Detering, now 54, began looking for a "transportation and communications hub" for his South American operations, the same supporter kicked in $120,000 to purchase a Buenos Aires condo in a deluxe residential tower, complete with a pool, fitness center and conference rooms. It wasn't the larger space that Mr. Detering had originally proposed-but, hey, a kid sister has to set some limits. It didn't hurt that the sister in question, 53-year-old Diane Paddison, had been chief operating officer of two Fortune 500 companies and, Mr. Detering admits, had done a better job of managing her nest egg. It also helped that she and her husband, Chris, a management consultant, found the missionary work in keeping with their largely faith-based philan- But ultimately, says Mr. Detering, "It was really just them helping me out."

Say, Brother, can you spare a…few thousand bucks? We've all heard about the so-called sandwich generation, many of whom may be celebrating this Mother's Day by worrying about how to financially support their aging parents on one side and boomerang kids on the other. But financial planners say that few people factor in the impact of other family members-especially financially challenged siblings- who might sheepishly slip in a loan request while helping dry the holiday dinner dishes.

When the contributing sibling can afford to provide the help, the arrangement can work out well. (Bonus points when the receiving sibling isn't addicted to gambling, controlled substances or daytime TV.) But in this unforgiving economy, baby boomers in particular are seeing a bump in financial requests from close kin who lost a job, ended a marriage or- sounding familiar yet?-got caught in the housing bubble. And as boomers move beyond their prime earning years, experts say, such requests will likely accelerate.

Case in point: The Employee Benefit Research Institute predicts that nearly half of Americans ages 36 to 62 may not be able to afford even basic living expenses in retirement.

Which means you probably don't have to look too far down the table to find a struggling sibling. In a recent study by Charles Schwab, a whopping one-fourth of respondents said they're worried they will have to financially support their siblings. And as the postwar babies try to steer their own ships into a safe retirement harbor, says Gary Gilgen, director of financial planning for Rehmann Financial, an advisory firm with some $2 billion under manage- ment, the last thing they need is extra cargo: "Some of them really can't afford it."

That financial pressure could make the decision to mix blood and bank accounts that much tougher, emotionally. On the asking side of the equation, say psychologists, the risk includes not only the shame brought on by sibling competition and the resentment of being beholden, but also the prospect that a buttinsky brother or sister will feel justified in doling out heavy doses of advice with their dollars. There's also the "hidden string" factor, where the receivthropy.

ing party is pressured to, say, spend weekends expressing gratitude by cleaning his brother's gutters.

For the giver, problems start with the strong prospect that a family "loan"-especially an undocumented one-can be as good as money flushed. The situation can easily rankle a lender's spouse, who may be less inclined to allocate hardearned assets to a brotherly bailout. But as the economy leaves many Americans struggling to pay for basics like homes, health care and higher education, more will be facing the question of who they are willing to backstop in life- and to what degree.

"I'm definitely seeing more noise and discussion about siblings," says Erin Botsford, a financial adviser in Dallas and the author of "The Big Retirement Risk," adding that she has seen such requests jump 20% to 30% in her practice in the past few years. "To ignore them is to the clients' peril."

The calculus becomes cloudier because sibling ties don't always command the same intensity of loyalty and obligation that comes with, say, the mother-child bond. According to the Pew Research Center, 40% of adults with an elderly parent gave them money in the past year. And in another study, nearly a quarter of baby boomers said they are financially supporting an adult child. But, says Marty Martin, a professor of business at DePaul University and a practicing financial psychologist, the filial imperative isn't the same as helping a sick parent. "When it comes to siblings, there's one question of being able to help and another of being willing to help."

Enter the burgeoning intrafamily loan business-a handful of do- it-yourself lending firms that try to make the helping process less emotional. The firms say they've facilitated hundreds of millions of dollars' worth of deals between family, friends and even strangers looking for a decent rate of interest. National Family Mortgage, for one, says its sibling-to-sibling refinancing deals have more than doubled since 2009. Whether these so-called peer-topeer companies simply provide paperwork and loan scheduling (LendingKarma.com, Lend- Friend.com) or offer more robust loan "marketplaces," complete with screening and underwriting (LendingClub.com, Prosper.com), they all offer to help lenders formalize the deal, avoid onerous bank fees and sidestep potential gift-tax pitfalls.

But even the companies note that the loans generally aren't backed by collateral, a fact that can create complications. If a borrowing sibling declares bankruptcy, for example, this debt goes to the back of the proverbial line, behind those of secured creditors.

Says Geno Moscetti, CEO and co-founder of San Franciscobased LendFriend, "There's no way to make anything foolproof."

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