Jason Glisczynski. (Contributed)

Column: Making wealth management decisions as a couple

February 11, 2023February 13, 2023

By Jason Glisczynski

I recently read an article from the VFO Inner Circle, a global concierge group I have on retainer to keep me abreast of the most pressing issues facing wealthy investors today. I found the article really hit home for me, as my wife and I have had our share of challenges when dealing with financial matters with our significant other.

Here are my big takeaways from that article and my own personal experience.

Key Takeaways:

Often, one spouse or partner takes the reins when it comes to financial decisions.
Collaborating with your spouse can potentially strengthen your marriage and your bottom line.
Discussing your shared goals and your individual appetites for risk is an important step to take.

When making decisions about your wealth and finances, how often do you and your spouse (or partner) work together as a team to arrive at a place where you’re both happy?

If you’re like many Americans, the answer may be “not enough.” Various studies over the years have found that the higher-earning spouse in a marriage tends to take responsibility for saving and investment decisions for the family.

While that might seem to make sense on a “gut level,” it may not be the best move for many couples. Consider that husbands and wives report higher relationship quality and stability when they feel they are both involved in financial decisions and processes. What’s more, when both partners have a say in wealth management decisions, it could mean the potential for a bigger bottom line (more on that later).

With that in mind, here’s a look at what you can do to better ensure that you and your spouse are working as true partners toward your most important financial goals.

Reasons to work as a team

While division of labor can make sense in many areas of life, financial decision-making probably isn’t one of them. Indeed, there are numerous reasons why couples should be making a concerted effort to team up and work with each other to address the investment and other financial issues that can significantly impact their lives—today and far into the future.

Stronger commitment to your goals. Couples who set goals together and are on the same page are more likely to mutually commit to those shared goals—versus, say, to goals that are dictated by one spouse to the other.
A reality check in stressful times. Even the best wealth plan can crumble if you panic during times of market volatility and uncertainty and make rash moves—such as selling out of stocks after they’ve plummeted in price. By acting as partners, you and your spouse can potentially help each other when one of you gets nervous and is tempted to let emotion override rational thought. .

This advice could be especially important to couples who defer decision-making to the male spouse. The reason: According to various studies, female investors tend to outperform their male counterparts, in part because women show less propensity to trade securities frequently or make highly speculative investments.

One of you will likely live longer. Women generally have longer life expectancies than do men, so there’s a decent chance that a wife will eventually have to deal with financial decisions without her husband—possibly for many years. Waiting until that moment to begin learning about and dealing with the family finances could spell disaster, even if the surviving spouse gets good financial advice.
Shared risk—shared responsibility. Even if you’re a math whiz and your spouse isn’t, the two of you should both weigh in on financial decisions. Otherwise, only one of you is essentially on the hook for any money mistakes that occur—opening the door to second guessing of the other, blame and resentment.
Stronger marriage. Money issues and concerns are regularly cited as leading drivers of divorce—and financial arguments may be the strongest predictor of divorce. Working together to address financial questions and challenges can potentially alleviate money stressors that may damage the health of your relationship.

Find more creative, impactful solutions. Two heads can be better than one when trying to make important financial moves that impact both of you. Say, for example, that you and your spouse work for employers who offer retirement savings plans with significant differences in terms of matching and other features. Rather than both of you devoting all you can to your respective plans, you may decide the best move for now is for one of you to pay down debt while the other maxes out his or her plan. By coordinating efforts, you could address various goals faster than you might if each of you made decisions in your own silo.

Tips for working together

If you’re not currently consulting with your spouse on wealth management matters—or even if you feel that maybe you could strike a better balance—consider some action steps that could potentially set you up for more collaborative decision-making going forward:

1. Boost your financial smarts

Often, we see that one partner has less investment acumen than does the other—or at least feels that he or she has less. To work together on an issue, it’s helpful for both of you to have knowledge of the various topics involved. That doesn’t mean you have to go back to school, although adult-ed classes on investing and finance are increasingly common. Consider reading investment primers from reputable financial publications, then dive deeper once you’re confident you understand the basics. And certainly enlist your financial advisor for help—he or she can answer questions and explain a range of financial concepts.

2. Be willing to give up some control

If you’re the one in the relationship making all the decisions, ask yourself why that is. Do you have the urge to exert control over money matters? How good are you at welcoming your spouse’s opinion about financial issues and listening to those ideas with an open mind? Effective mutual decision-making requires a willingness to collaborate and compromise—even if you’ve always handled the finances or you know more about investing than your spouse does.

3. Discuss your goals—shared and individual

Sure, you’ve probably done this, but when was the last time you compared notes about what you both want from life? Most people’s goals for themselves as individuals and as a couple change at least somewhat over time, so a check-in is a good idea. You can even make separate lists of big goals, rate them 1 to 10 in terms of importance and compare your lists.

Being clear on your various desired outcomes can potentially help both of you make better decisions and compromises about saving, spending, investing and other financial topics. Say, for example, that one of you wants to travel the world while the other wants to spend as much time as possible with your heirs. A middle ground could involve renting houses in countries you want to visit and inviting family members to join you on those vacations.

Your goals can also serve as reminders of why you take certain actions. Whenever you discuss a potential financial decision, consider whether it moves you closer to (or further from) the objectives you’ve discussed.

4. Clarify your respective tolerance for risk

It’s common for one spouse to feel comfortable with investing aggressively while the other favors a more conservative investment approach. This difference in risk tolerance levels can create tension when trying to make shared decisions about, say, the percentage of your assets to hold in equities versus fixed-income investments. That tension can soar in retirement, when an investment portfolio may be the primary source of income.

Some considerations for coming to an agreement if the two of you have different risk profiles include:

Your wealth relative to your goals. If as a couple you’ve already built more than enough wealth to achieve your key goals, you might decide to emphasize investments focused on the preservation of wealth. Conversely, you might decide that your wealth means you can afford to invest more in stocks and withstand any volatility. There’s no single answer that’s perfect for everyone. Rather, it’s about weighing how much risk you can afford to take against how much risk you actually need to take.
The value of peace of mind. Perhaps one of you is happy to live more simply if it means your net worth won’t fluctuate greatly from year to year. If having that comfort is deeply important to your marriage, consider whether you’re willing to adjust your own expectations in terms of lifestyle and portfolio construction.

Ultimately, you might decide to adjust your asset allocation to where it makes the more conservative person most comfortable. Conversely, you could decide to meet in the middle with a portfolio that may be more volatile than you prefer but more conservative than your spouse would choose. Again, there’s no perfect answer—the key is to have the conversation and arrive at a strategy you both can live with.

5. Enlist your advisor

Of course, a trusted professional can help you consider these and other crucial financial issues as a married couple and find a path to agreement. They can also help you cut through any confusion so you can focus on what taking (or avoiding) an action would mean to your bottom line—and your peace of mind. For starters, make sure you both attend meetings with your advisors so you know what everyone involved in your financial life is thinking, and why.

Conclusion

Like marriage, managing money is a partnership. If you take steps to work well with your spouse when it comes to your assets, both of you can potentially find yourselves happier, healthier and wealthier “so long as you both shall live.”

Jason Glisczynski is co-owner and principal advisor for Silvertree, LLC. Investment Advisory Services offered through Brookstone Capital Management (BCM) LLC, a Registered Investment Advisor. Silvertree, LLC and BCM are separate companies. Visit www.silvertreeplan.com for more information.

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