On the most romantic day of the year, advisors may want to consider how they serve couples and reinforce good financial habits
If only a meeting with a financial advisor was a standard step in the early days of a relationship. Wouldn’t it be great if sometime between leaving a toothbrush at each other’s places and taking their first vacation together, new couples sat down with an advisor for an objective conversation about how they save, how they spend, and what their goals are?
Unfortunately for those couples and for the industry, the introduction of a financial advisor tends to come later in a relationship, if at all. That can mean some dynamics around saving, spending, and life goals go unaddressed. Sometimes bad habits can be reinforced and an eventual conversation about finances can often end up destroying a relationship.
With Valentine’s Day coming tomorrow, Blair Evans, AVP of Tax and Estate Planning at IG Wealth Management talked through some of the ways advisors can help couples navigate these interpersonal issues around finance. He talked about the value that can come when an objective third party facilitates a couple’s financial conversations and the long-term benefits of building a plan as one of the early stages in a relationship.
“Communication is really important in every stage of relationship, especially new stages. I think in a new relationship, typically, you would start off with, some of the more baseline subjects from a financial perspective, really understand what each other's thoughts are on spending versus saving, and just see how aligned you are with those,” Evans says. “Often, it's a very difficult subject to get into, but I find if you break a very complicated subject down into smaller components. It leads to a more fruitful conversation, and you're building momentum as you move forward.”
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Conversely, Evans sees risks for new couples emerging if they skip over those important early conversations about saving and spending. Finances are an incredibly common cause of break-ups, and a proactive conversation can help manage those issues. Adding an advisor to the mix, Evans says, can help turn those early conversations into a plan that reflects both clients’ considerations and personal approach to finances.
Even among couples who think they have a clear outline of how they manage their finances, Evans notes that there may be gaps, especially with regards to a long-term plan. Advisors can help close those gaps by introducing topics like investing and risk tolerance or prompting the couple to align on what their long-term goals really are.
All of that is a bit easier said than done. Wading into complex interpersonal dynamics and personally held views around saving, spending, goals, and risk can be a challenging task for any advisor. Evans believes that advisors should avoid coming on too strong in the first few meetings. Instead, introducing stories of other clients they’ve served in similar situations ought to open some doors.
Evans says that asking certain key questions can help get clients started, especially in the presence of an advisor as their objective facilitator. Maintaining that objectivity is key, but turning sometimes difficult topics into a productive conversation can be easier with the advisor as a third-party to mediate through any confusion or emotional reactions.
It may also be that one partner has a greater interest in receiving advice than the other. In those situations Evans notes the importance of that continued demonstration of value. Driving home the importance of both partners’ buy in is key to helping any couple begin a successful financial life together. There may be cases where one partner is more involved, but Evans stresses that it’s then the advisor’s job to ensure the other partner is involved at key stages in the plan and their goals remain represented throughout the relationship. While it touches on interpersonal issues and dynamics that advisors might not always feel comfortable in, Evans believes this work is key to advisors’ and couples’ long-term success.
“Those discussions between the partners can sometimes feel uncomfortable. And when an advisor is new in their relationship with these clients, it can be less comfortable having those discussions as well. But I would just emphasize the importance of having those discussions,” Evans says. “They don't have to be all-encompassing at the beginning. You can break in the larger financial planning discussion into small components and start off small and start building momentum that way as well.”
