Wealth professionals encounter all sorts of clients. There are regular everyday working Joes. There are high-net worth types. There are the needy and demanding. And then there are the couples, the client pair that bring a dueling set of challenges.
Aaron Keogh, president of Greendoor Financial Inc. in Windsor Ontario, is the president of that city's Advocis chapter. He works with several sets of couples in his practice and admits it can be a difficult working with duos—especially if finances are something the pair has not discussed in-depth prior to getting hitched.
"Couples can pose a real challenge, especially if they haven't talked about finances prior to marriage. It is surprising how often this is the case,” says Keogh. “Sometimes married couples haven't discussed financial goals. But once they are married they find they have these goals. It can be a surprise to each other to come in and find they think about these things in different ways.”
This is especially true if it turns out that one spouse has a propensity to save while the other spouse is a bit looser in their spending habits. "In many families finances are not taught. In many cases I end up counselling the couple on good financial habits," he says. One in a couple might be all about paying down debt and completely against leverage in a portfolio. Another partner might be okay with some debt and leverage. One partner might want to go to Africa and Paris in retirement. The other might want to stay home, or do three months in Florida each winter.
How do you bring the two sides together?
Keogh gets his clients to work through their priorities by educating and laying out potential paths of action. "What are the goals and objectives? Go through the options with the clients. Run an analysis on both options. Take the picture, have them think about it,” says Keogh. It often helps to focus on getting to shorter-term goals. Show them the projections three to five years down the road. Focus on what the couple hopes to achieve just a few years out and stayed focused on getting those goals accomplished first. Then the couple can begin to work out the longer-term plan.
“It's good to be holistic. We're having conversations. Let the ideas out. One in the couple might say, 'I never knew you wanted to do that.' If both parties are active in the planning put out four or five different options and then have them go home and talk about this stuff. You definitely don't want clients to make decisions on their first meeting. I always have them go home and talk about this stuff. They can make the tough decisions on their own time. It is not for me to tell them what to do, but to understand the goal. The advisor can point out the patterns and the paths. But it's for them to make the decisions," says Keogh.
Of course, there are tougher cases to crack. Another challenge is a partnership where one makes more than the other, or when one in the couple feels entitled to certain things. “I enjoy working with clients. But when there are two very different outlooks....finances can create stress in the marriage,” says Keogh. Getting the conversation started about how to achieve potential (achievable) goals is the key. “It's a matter of education. Financial literacy is the path I like to take my clients on,” says Keogh.
Of course, the advisor can get lucky with one of those couples where one in the partnership is educated about finances and wants to do the planning, while the other one wants nothing to do with the numbers. Keogh notes this tends to be the case with older clients. Younger couples are often more equal in terms of decision-making and financial knowledge. But if one person has a greater knowledge and one person is making the choice, "that's not a bad thing," says Keogh.
Though, even in these situations, expectations among couples can change over the years. Once the kids are out of house expectations sometimes the goals will change. "You have to be dynamic in planning," he says.
Another critical challenge can arise when there is an inheritance on one side of the partnership, someone wins a lottery or sells a business. “That when you have to play the role of mediator. Some see the money as a way to do things they couldn't before, others see it is a stable, substantial nest egg,” says Keogh. “Tell the couple to take a few months to think about what to do with the money. Put it in a high interest bank account and think about it. Allow it to feel real. Let them get past the initial emotional response before they make a move…I never have clients make any decisions their first time in the office. Have them go home and talk about it. Start the conversation,” says Keogh.