Clients who get married are starting a life together that could benefit from a financial planner.
But financial advisors seeking to retain them for the long term must engage both spouses in helping them through the many emotional issues connected to shared money and wealth — let alone the technical planning strategies, according to panels at this week’s CFP Board Connections Conference in Chicago.
The couple may not even stay together if they can’t work toward shared financial goals for the future. And advisors may lose them as clients, especially in the event of an untimely death of one spouse and a so-called horizontal transfer of wealth.
Planners and other experts at the conference delved into the behavioral finance aspect of marriage in one specific panel, but the topic came up in at least two other discussions as well.
Money “is inherently left-brained,” which equates with being “a logical thing, meaning two plus two always equals four, right?” said Jeremy Gilliam, a licensed marriage therapist who works with the clients of wealth management firms as the founder of Thrive Marriage and Family Therapy. “It isn’t for the couples that come to your practices. … I’m the therapist up here saying, ‘Money is an emotional thing,’ but it really is an emotional thing, because, again, logically, you know that one plus one equals two, but for the couple that’s sitting in your practice, one plus one may not equal two, if you have somebody that’s risk-averse.
“It’s not always as simple as, ‘If you do this and this and this.’ Depending on their life experiences and their background, it could be a whole different scenario and different story for them, depending on how they approach and how they feel about money,” he said.
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First, start the healthy conversation
A lot of research suggests that many partners are simply uncomfortable discussing the topic of money with each other entirely. For example, some couples may find that keeping their financial accounts completely separate works for them. But when an audience member asked their opinions, Gilliam and other members of that panel, Preston Cherry, the founder of Green Bay, Wisconsin-based RIA firm Concurrent Financial Planning, and Taylor Kovar, the founder of Lufkin, Texas-based RIA firm 11 Financial, each recommended against that approach.
Regardless of the couples’ decision about that, their planners must help them find a unifying understanding of their wealth and create an environment in which they can talk through the toughest topics openly, according to Cherry, a former president of the Financial Therapy Association and the director of the financial planning program and the Charles Schwab Foundation Center for Financial Wellness at the University of Wisconsin-Green Bay
“That takes courage, trust and vulnerability. I know people toss those words around these days like they’re Skittles,” he said. “We need to agree that this is a challenge for our household or this is something that we want to accomplish.”
Unfortunately, many couples never reach that point. Kovar has owned his RIA for roughly a decade, but he first reached out to Gilliam a handful of years ago after a difficult client meeting, he said. Later, Kovar and his wife Megan launched a marriage and money education firm called The Money Couple.
“I had a couple in my office, and they were talking about money, and we’re digging into their finances, and they are just going at it,” Kovar said. “I was like, ‘Hey man, you’ve got to help me out here. You’re a marriage family therapist. Help me help these people,’ because what we found out is a lot of couples just don’t talk about money, or, if they do, it’s fighting.”
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Reading the signals
More planners have been embracing the behavioral side of money and wealth in recent years, including trying to bulk up their financial therapy training or finding the right boundary for situations that beg for referrals to a professional therapist. Planners who dismiss the connection between their clients’ marriages and their wealth will, at the very least, fail to recognize many specific planning opportunities and challenges that relate specifically to spouses.
That could come in the form of a divorce that completely alters their wealth or, in some cases, financial abuse that brings red flags about possible domestic violence. Designations like the certified financial therapist or the certified divorce financial analyst can provide specific expertise, but experts say planners can gain familiarity simply by recognizing many of the common patterns.
For instance, a surviving spouse may discover how their partner’s death “can really crank their tax bracket,” said Megan Brinsfield, president of Motley Fool Wealth Management, the registered investment advisory arm of investing website The Motley Fool. That’s because they’ll change from filing jointly to as an individual with higher income. Similarly, the choice of beneficiaries of, say, a Roth individual retirement account, can leave a major impact for a widow or widower, compared to transferring it to a charity or non-qualified trust, Brinsfield noted.
“That means that Roth is going to have to be emptied in five years, versus, if someone is leaving their Roth to a spouse, that spouse can take it over their lifetime,” she said. “That can create materially different wealth outcomes, tax outcomes and emotional outcomes as well. So you have a large role to play, not just in the upfront decision, but with some of the particulars downstream as well, related to couples. I think there’s a big part of the discussion that really can be somewhat sensitive. For clients that are aging, I do find the clients become a lot more, sort of, macabre as they get older and open to talking about their own deaths.”
Luckily, those days are much further away for many newlyweds. Planners can aid couples trying to resolve thorny issues such as the degree of support for the extended family of one of the spouses, said Gloria Garcia Cisneros, a wealth manager with the Los Angeles office of advisory practice LourdMurray. Often, spouses have “different relationships with money” so advisors can give them a sense of acknowledgment and tools aimed at their collective goals, she said.
“Sometimes it can be give and take,” Garcia Cisneros said. “Sometimes they just haven’t even had space to talk about it.”
The links between money and marriage reflect how much planning has become so much more than managing investments, said Brenton Harrison, the founder of Nashville, Tennessee-based advisory practice New Money New Problems. He speaks to married clients grappling with money matters in the relationship “all the time,” he said, noting that he would soon be meeting with a couple trying to plan for the advanced dementia of one of their parents.
“When you have a conversation with them, you can tell they’ve been fighting about it,” Harrison said. “This is not like, one person is a good person and one person is not a good person. It’s just different lived experiences.”
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Shifting the dialogue
Kovar and Cherry shared processes that couples can use to drive a better dynamic of planning as a couple for the long term. Cherry’s advice for fellow advisors educating clients about marriage and money revolved around questions like, “how did you approach having that dialogue to hear both the perspectives about the adult child?” The issue of financial support for an adult child may clash with other goals, such as taking two big vacations a year or retiring at 55 years old, he noted. Advisors need to focus on speaking with both spouses to drive home that they’re a financial team and ensure that no one feels left out of the discussion, he said.
“The challenge is there. If you don’t address it, you’re going to lose a client, because part of the process is to set an expectation with the outcomes that you’re trying to collaborate with a client,” Cherry said. “That’s perspectives from spouse one, spouse two. They disagreed on how much they should be spending on the adult child. So, if the expectation is they want to retire at 55 but yet they can’t find the money to max fund at 50, well, there’s the money right there.”
The Kovars’ marriage and money education firm offers a quiz called “The 5 Money Personalities” that RIAs can deploy under their own branding or send clients to directly to determine if they are a “saver, security seeker, spender, risk taker or flyer.” When couples grasp how each partner views money or relates to the concept of wealth itself, they can reduce the stresses and language that “can feel derogatory” toward each other, Taylor Kovar said.
“It can feel like you’re controlling me,” he said. “I met a client recently who’s like, ‘I’m a grown man. I should go spend the money however I want to. Why do I get an allowance? I’m the one that is making the money.’ It’s like, yeah, but, I mean, you like being married, right?”
