As you may know, we’re a family business. Maeve, our oldest, who has been our “Chief Landscaper” for years is going off to college. So, her younger sisters, Phoebe and Sophie, will have some tough shoes to fill when it comes to cutting our 15’x15′ front lawn. Jill, our “Chief Everything Officer”, has been our nucleus since the beginning, both at home and at work. I don’t know what I would do without her by my side.
So, as a family business, we speak with a lot of couples. Some of these folks have been together for decades. They love and cherish each other; they’ve made beautiful families and homes they’re so proud of. Over our years together, I’ve shared countless stories with you about the folks I’ve met and helped. But, as it happens, every once in a while, a discussion incites a heated exchange between husband and wife about finances that needs sorting. So, I thought I’d offer some observations that might help extinguish the firestorm.
Investing can be confusing and anxiety-inducing for even the most financially-savvy of us. Combine that with the usual stresses of married life and it can push issues that were quietly simmering on the backburner into a full boil. Countless surveys show money issues – how it’s spent, how it’s saved, how it’s invested – as a top bone of contention between couples. That’s why I think it’s crucial for couples to invest together while trying to keep the emotional turbulence at a minimum.
Hey, I get it.
Financial discussions are personal. When you discuss how to manage your money, you’re not really focusing on the dollars and cents; you’re actually thinking about the lifestyle you’ll live, which vacations you can take, which gifts you can give, which home improvements you can make. It’s very personal. But, investing requires the head more than the heart, and too often issues of the heart can get in the way of making appropriate investment decisions. So, your heart really shouldn’t get the invitation to these conversations.
As with many issues in marriage, communication is the absolute key. Couples need to be open and honest about their investment plans and concerns. Both spouses need to feel they can communicate candidly with each other and the other stakeholders, including financial advisors, attorneys, and accountants.
It is not uncommon for one spouse to take the lead when it comes to investing. There’s nothing wrong with this. It’s a dynamic that works for countless couples – we don’t just see this when it comes to investing. It’s a tactic we use in many other aspects of our married lives. One spouse manages the couple’s social calendar, the other might manage the home improvements. But, that doesn’t mean that all investment decisions should be funneled through that one spouse exclusively.
It can be appropriate, and in some cases necessary, for couples to invest separately from one another. Take for example a retirement account. This type of account remains in an individual’s name even if the spouse is named as a beneficiary. Regardless, transparency is essential – keep your spouse informed about any investment decisions you’ve made, so they can be aware, even though they exercise no direct control over them.
Folks, make sure your spouse has the usernames and passwords needed to access accounts and financial services, even if you are primarily responsible for their maintenance. This may sound grim, but bereaved spouses and families can spend months and endure huge amounts of anguish trying to gain access to accounts left behind by loved ones who failed to make accommodations or provide the necessary details. So, make sure important information is documented and in a location your spouse knows.
Understanding your spouse’s relationship with money is critical, and for many of us, that requires listening. Don’t assume you know better. Talk to your spouse about their views and goals regarding money and finances. This is as important for couples who are still young as it is for those who have been together for decades. After all, each of us has been molded by the varied experiences in our lives. The experience of watching our parents spend and invest, the baggage we carry with us from previous relationships, the experiences we share, it’s all cumulative, and it needs to be discussed.
Whenever possible, it’s appropriate for spouses who are investing together to analyze opportunities and discuss investments as a team, to help make informed choices that are seen as successful by both spouses. Setting investment goals together allows you to work towards a common goal. And, as a team, you will see that goal become more achievable. By setting goals together, and by making decisions on how to reach those goals, you and your spouse are equally invested – emotionally and intellectually – in the outcome. You are more likely to stick to your long-term plan if you’re working together to a common end.
Part of that process is defining what success looks like to you both. Define and articulate your goals. Whether it’s to save an amount for your child’s college, gather a down payment on a vacation home, or determine at what age you will retire, defining your goals will help you both know and understand what you are working towards.
Different people have very different risk tolerances. This is as true for couples as it is for individual investors. Couples making decisions about their financial future are bound to clash at times, especially if they have different philosophies towards risk. In these situations, compromise is a vital tactic.
But, compromise doesn’t mean that the couple must always agree or be in lockstep with one another. Compromise is about mutual concession where both parties find a middle ground. Designing a system to allow you to work through these disputes can certainly help keep things balanced. That will depend entirely on the personalities and dynamics of the couple. It can often help to have an impartial third party available, such as a financial advisor, to mediate issues related to investments and to provide insight that will help you make the appropriate decision. Decisions based on facts rather than your emotional triggers.
As you develop and implement goals together, make sure you take the time to see how they’re working. Sit down together a few times a year to monitor your investment strategy. See how it aligns with the goals you’ve articulated together. Determine whether you need to adjust your plans in order to reach those goals.
All of this, of course, is the backdrop to the rest of your life – and your life shouldn’t be all about investing. Investing is just one tool you use to live the life you want. Remember that life with your spouse is precious. Enjoy every moment you can with those you love.
Have a great week folks!
And remember, be vigilant and stay alert, because you deserve more.
Jeff Cutter, CPA/PFS is President of Cutter Financial Group, LLC, a wealth management firm with offices in Falmouth, Duxbury, and Mansfield. Jeff can be reached at jeff@cutterfinancialgroup.com.
Cutter Financial Group LLC (“Cutter Financial”) is a SEC Registered Investment Advisor.
This article is intended to provide general information. It is not intended to offer or deliver investment advice in any way. Information regarding investment services is provided solely to gain a better understanding of the subject or the article. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy will be profitable.
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