It is typical in a family for one spouse to oversee the finances. That not only involves paying the bills, but keeping up with investments and insurance, and ensuring documents like wills and powers of attorney are in place and current. But knowing that the future is unpredictable, and that circumstances can leave one spouse alone to handle everything, savvy financial advisors must find a way to involve the previously uninvolved spouse, however reluctant, in the financial planning. Minimally, both spouses should have a working knowledge of the family’s finances, including their financial commitments and objectives.
A few relevant notes:
- While younger couples and millennial families show more balanced roles, older couples, including baby boomers, tend to maintain a male-dominant dynamic. A 2021 UBS Global Wealth Management report found that only 20 percent of married women said they were the primary decision-makers for long-term financial planning.
- On the other hand, women on average live longer than men; as well, divorce among older couples is on the rise. As such, women increasingly find themselves in the role of financial decision-maker. According to McKinsey & Co., U.S. women will control $34 trillion, or roughly 38 percent, of investable assets by 2030. The figure was $7.3 trillion, or 29 percent, a decade ago.
- Even while both spouses are alive and together, shared knowledge of their finances aligns goals, reduces the likelihood of conflict over finances, and helps them make decisions about such issues as their children’s education plans or college savings for grandkids, or the care they will need in their elder years, as well as how they want to build and leave their legacy.
- We know from studies as well as our own extensive experience with family financial planning that couples who plan together are more likely to stay disciplined, stick to strategies, and reach goals faster.
Financial Planning for Couples
Many women who were not the financial gatekeeper in the family tend to turn to their children for recommendations when they find themselves in control of the family assets. If a financial advisor does not involve the spouse in financial reviews and other discussions related to the family’s wealth, it is understandable that the spouse will turn elsewhere to someone known as a trustworthy source.
That is why as advisors we involve both spouses in key discussions about the family’s wealth. That includes estate planning. We want to ensure they agree on what they want to happen to their wealth after their deaths, from distributions to their heirs to contributions to charities. The concept of stewardship often comes into play. In most cases, the family will only be able to pass along about 60 percent of its wealth; the rest is “social capital.” A good steward will want to be responsible for proactively directing their social capital; if this is not being addressed as a couple, the federal or state government or both will decide how their wealth will be spent.
The “Great” Advisor
In emotionally charged moments—loss, divorce, sudden wealth—people tend to make impulsive decisions. A familiar, trusted advisor can be a calming, strategic guide. And the more your advisor understands your family’s dynamics, dreams, and concerns, the better they can tailor their advice, help with financial decisions, and anticipate needs. This means more proactive and customized financial planning, and when you as a couple are working together, being better informed means making better decisions for the entire family.
An advisor needs to establish rapport with the family in order to have frank conversations about their finances. The advisor should stress the importance of both spouses knowing the family’s intentions and positions on financial issues if they want to increase the probability of accomplishing their financial goals. The advisor has to appreciate that it’s their duty as a professional to have those conversations.
Having dealt with hundreds of affluent families, we at HBKS are well aware of the importance of these conversations and are adept at making them happen. As well, with experts on virtually all financial issues in our firm and partner firm, HBK CPAs & Consultants, we know which front line professionals and service line leaders to leverage in their markets in each stage of the process to advise on any concern or consideration.
There are multiple decisions to collaborate on, more than just allocating assets. Discussions extend to selling the family business, perhaps to private equity or transitioning it to an heir. We do quality of earnings reports, create enhanced financial statements, and assess the value of the business to ensure the sale will meet an owner’s retirement goal. We ensure the right transition plan is in place in case something happens to the owner, and work with trustees to pass along wealth to heirs and charities.
Great advisors are lifelong partners. Building rapport with both spouses—and the children as well—deepens trust and makes the advisor a true extension of the family’s support system.
For more information or to schedule a meeting with an HBKS advisor, call us at 239-433-7533, or email me at dpiccirillo@hbkswealth.com.
Important Disclosure:
The information included in this document is for general, informational purposes only. It does not contain any investment advice and does not address any individual facts and circumstances. As such, it cannot be relied on as providing any investment advice. If you would like investment advice regarding your specific facts and circumstances, please contact a qualified financial advisor.
HBKS Wealth Advisors is not a legal or accounting firm, and does not render legal, accounting or tax advice. You should contact an attorney or CPA if you wish to receive legal, accounting or tax advice.
The historical and current information as to rules, laws, guidelines, or benefits contained in this document is a summary of information obtained from or prepared by other sources. It has not been independently verified but was obtained from sources believed to be reliable. HBKS Wealth Advisors does not guarantee the accuracy of this information and does not assume liability for any errors in information obtained from or prepared by these other sources.
Investment Advisory Services offered through HBK Sorce Advisory LLC, d.b.a. HBKS Wealth Advisors. Not FDIC Insured – Not Bank Guaranteed – May Lose Value, Including Loss of Principal – Not Insured By Any State or Federal Agency.
