By Robert Ossers
As a millennial advisor who is part of a firm with a focused niche on divorce, I have quickly learned the misconceptions that many firms have when it comes to working with women and more specifically, women who have just been through a life altering event—divorce.
First and foremost, I see firsthand now that one of the leading factors attributable to the high divorce rate in this country is related to the management of household finances. While here are a ton of articles on how to plan for divorce, things to gather, how to overcome it and how to make certain that it is equitable, what is surprising is there is so much less on the way into a marriage or for long-time married couples or couples, which I will call “financially dysfunctional,” to create a plan and have an open dialogue around the dreaded topic of money.
What makes a marriage financially dysfunctional?
Lack of transparency. Lack of clarity. Lack of involvement from one of the spouses, often the one not in control of the money. This disconnection leads to fear of not knowing. Fear of not understanding and an eventual argument about overspending. Perfectly capable and smart women sit in our office day after day and are shocked that they are unable to answer questions initially posed regarding the assets accumulated during their marriages, how they are titled, estate planning and tax planning that has been done, etc. We have heard it too many times that, during their marriages, they were simply told that things were “being handled,” while signing documents they didn’t read or asking questions as to how certain things work; understandably so when you have placed your complete trust in someone you believed to be a lifetime partner. Moreover, we find that there is typically one person who has the primary relationships with the family advisor, attorney, CPA and other professionals. In reality, it does not matter who handles the finances in the marriage—it could be that one person has more knowledge, expertise in the field or simply a greater interest. We also know that keeping one party out of the finances is NOT always done with bad intentions. But what we do know for certain is that all marriages end, either in death or divorce. Financial planning and financial awareness should be done absent an emotional crisis or upheaval in a woman’s life.
Taking steps now to eliminate finances being an issue LATER JUST WORKS. Plain and simple. Why not “play the 50 percent odds” another way? Why not strive to be in the 50 percent of marriages that make it? Why not make a plan to understand how each party in the marriage views finances, how they were taught (if they were taught), how they value money, how involved they want/need to be and simply what money even means to them? Money is not something that is easy for most people to talk about – it can be uncomfortable, we get it! But my hope and goal is to share what I do personally, and call it lessons learned.
Create a shared vision
First off, encourage clients to talk about it—create a shared vision! Speaking about finances is not a “finger pointing” competition to call out one spouse on how much they are spending and who contributes more financially. My fiancée and I sit down once every month (sometimes weekly when a lot is going on) at our dinner table, with our favorite show on (currently The Punisher—not an endorsement, but wow!) to see how things are going and check if we are on track. We are not questioning each other on what is being spent—we are checking in to see if we are on pace for the vacation we want to take, the wedding we are planning, what provider is overcharging us and where we can negotiate and, more importantly, how the “play” bucket is doing.
You can call this whatever you want, but for us, it’s our “financial date night.” We have set up different accounts for home/joint expenses, long-term goals, vacation and an emergency fund. There will always be someone who spends more than the other person in a relationship, but there are no surprises if you’re getting together monthly. And more importantly, if all of your buckets are filled and on pace … who cares who’s spending what? We are not only looking at historical spending here, the most important part is the forward looking; where do we have to trim and is there extra money (tough, living in NYC), where we may be able to speed up a bigger purchase or goal. This doesn’t have to be fancy or involve crazy spreadsheets, it just needs to be done, in alignment with your clients’ style. For example, we pick which part of the finances we each prefer to manage. Whether that be by service provider, retirement accounts, or tracking of vacation budget, it can be split however your clients like. I have found that even if not weighted equally, this keeps us both involved and feeling like we’re sharing the responsibility and contributing to our financial goals. Regardless of the income bracket of the household, this holds true for every current and future marriage. I know this first hand, as we have been financial planning from our broke college years waiting on tables to blow it at the bar on the weekends, to today as young professional.
For marriages that are “more mature,” well entrenched in or on their way to financial dysfunction, advisors need to encourage the parties not to get upset if the person who has not been in control of the finances suddenly wants to be empowered. It doesn’t necessarily mean one spouse isn’t trusted! It means someone is saying, “This feels uncomfortable, I’d like to understand. How can we change this dynamic from being the ‘Black Hole of Money’ into something more transparent and light? And guys (whether client or advisor), beware of “Mansplaining” (though this can apply regardless of gender). One of the most frequent things I hear is how on spouses’ communication style around the finances may be taken as condescending, scolding or that the other spouse “just isn’t capable.”
I’ve watched our clients conquer from the disconnect and fear they have of money and begin wanting ownership and taking charge of their financial futures. Through our trademarked “Wife to CFO” program, we witness daily how meeting a woman where she is and designing a plan for financial clarity enables her to work at her own pace, discuss topics that engage her and engage in a style that is most comfortable for her. #NOJARGON ALLOWED is our mantra at Source Financial Advisors.
Creating time and space for important financial conversations can save relationships, and enhance them. If crisis does strike, either through death or divorce, this financial understanding will eliminate drama, fear, unnecessary legal fees and added time to get through such significant life transitions.
Robert Ossers is Vice President – Investments and Wealth Advisory at Source Financial Advisors in New York.