Independent Thinking^®

Planning and Investing as a Couple

Fifty years ago, wealth management typically started with a man-to-man conversation about the investor’s income, savings, and goals.
 

Today, professional women are confident equal partners in planning their family’s financial futures. But what of the couples whose marriages have spanned these social changes? Are they treated fairly by institutions that are mired in the past or focused exclusively on Millennials?
 
It’s an important question. Quite simply, engaging both partners in a relationship makes for more effective planning and investing. While the focus here is on so-called traditional couples, this certainly applies to all couples, regardless of age, sex, or financial expertise. Even if one has built a career in finance while the other has stayed at home, they’ll do better managing their wealth as a team.
 
Two perspectives – on risk, on lifestyle, on family, and philanthropy – best inform the financial discussions that, in turn, drive asset allocation, investment management, and trust and fiduciary solutions. Indeed, amid all the media frenzy about leaning in and leaning out, one thing seems clear: Couples, as well as companies and countries, do better when both men and women are fully represented in the decision-making.
 
Consider a couple, both in their early 60s, with very different views on risk. The husband, who had held a variety of senior executive roles in finance before retiring, was eager to grow their portfolio. The wife, who had left the workforce when they had children, was extremely anxious about cash flow. By allocating enough to defensive assets to cover their expenses for five years, they were able to invest the remainder – 65% – in growth assets, securing their lifestyle and positioning their portfolio for long-term growth. Both now feel more confident about their financial future.
 
There’s another reason to make sure that both parties in a traditional marriage are at the table in wealth management discussions. Often, the woman is younger than the man, a difference that, combined with a longer life expectancy for women generally, can mean that she will outlive him for years. Both may have thought of managing their assets as his role, but she will be the one left with the lasting responsibility. The better educated and involved she is, able to share her values and her views, the better for her, for their children, and for their shared legacy.
 
Too often, however, one partner, usually the woman, is silent. (This is especially true for the Silent Generation, born between the mid 1920s and the early 1940s.) In many cases, the advisor is at fault, projecting his or her biases in addressing only one partner. In that case, the solution is simple enough – find a new advisor. Wealth managers should never assume or indeed accept a lack of interest: Just about everyone wants to engage in at least some aspects of the management of their wealth.
 
Other situations are more complex. Interestingly, wealth managers often see a disconnect between spouses. The breadwinner may feel frustrated that the non-working spouse seems to show little interest in their finances, the fruit of their labor. But they may simply be intimidated, a concern that can be addressed through private wealth education, whether in an individual or family setting, or in groups of like-minded women. (See the article by consultant Sharna Goldseker and the list of upcoming Evercore Wealth Management Wise Women and other educational events on page 20.)
 
In some cases, one spouse may be genuinely disinterested in investing. In these circumstances, it may be that that she – and again, it could very well be he – should be actively encouraged to regard involvement as a shared responsibility. If a reminder that the likelihood is that she will one day have to manage their assets doesn’t do the trick, asking her to engage on behalf of her family and her charitable interests, and to set an example for her children and grandchildren almost certainly will.
 
Either way, it’s important that the education extend beyond the theoretical to hands-on, practical training. Start with regular discussions – both spouses should try to attend all meetings with their advisors – and then consider allocating responsibility for a meaningful proportion of the assets to the less experienced partner. There’s no better way to acquire knowledge.
 
We all have things to learn, from our advisors and from each other. Educating ourselves to share that responsibility is the most effective way to plan and invest. It can also be a pleasure.
 
Fred Taylor is a Senior Advisor to Evercore Wealth Management. He previously served as a Vice Chairman and Chief Investment Officer at U.S. Trust.