New research indicates that married and common-law couples have bank accounts that their partners don't know about. Are they hiding the same financial information from you, their advisor?
Your client comes to you admitting that she is storing away a secret stash of money.
The stash is hidden from her spouse.
You’re sworn to confidentiality.
What do you do?
“The confidentiality we have is with the individual client, so we can’t say anything,” says Marta Stiteler, an Ontario-based fee-only advisor. “It’s a tough one.”
A recent study out of Australia revealed that the equivalent of about 300,000 married or common-law couples admitted to having bank accounts unbeknownst to their partners, with the average amount stored ringing in at $30,000.
The survey, conducted for TAL Life Insurance, found that 45 per cent folks in married or common-law relationships have a bank account inaccessible to their partners, while 3 per cent have accounts of which their partners are unaware.
How does this situation fare with Canadian advisors?
“As far as the client keeping $300,000 in Barbados that his wife doesn’t know about because he is going to leave her, I don’t want to deal with a client like that,” admits Stiteler. “If they are going to screw around on their spouse, chances are they are going to screw around on you (the advisor). The bells and whistles are going off like crazy.” (Continued on Page 2)
Though Stiteler has never come across a situation like this in her career, she did have a client who was trying to hide debt from her husband. Together, they brought the debt down to a more manageable level by withdrawing from RSPs, but Stiteler didn’t fall short of providing an extra piece of, perhaps unsolicited, advice.
“I told her (the client) ‘You have to tell your husband. You can’t keep it a secret.’” Stitiler recalls. “’It’s important that you financially plan together.’ It did cause a bit of a rift but things are fine now.”
Despite this story, Canadian couples appear to be on the right track when managing their household finances.
A national survey conducted for the Chartered Professional Accountants of Canada (CPA Canada) last November found that 96 per cent of respondents are comfortable talking about financial matters with their spouse or partner, while 92 per cent said they trust the money decisions made by their significant other.
“It comes out loud and clear from our survey that Canadians believe that sharing information between spouses and partners is key to a successful relationship,” says Nicholas Cheung, director with CPA Canada. “And, it only makes sense because it is so important to share the same (financial) goals as your spouse, and to be on the same page to achieve those goals."
Other survey findings included:
• 94 per cent of the respondents felt that speaking openly about money signifies a strong relationship
• 85 per cent felt making a major purchase was a task equally shared
• 56 per cent had the same opinion about managing financial investments
• 50 per cent of respondents felt that managing day-to-day banking was equally handled
• 49 per cent felt the same way about ensuring the tax returns were filed
• 46 per cent of those surveyed felt that ensuring the bills were paid was equally split
• 69 per cent of respondents stated their spouse or partner had shared with them the PIN for at least one credit or debit card
• 70 per cent of those surveyed said they set a household budget together with their spouse or partner
Industry commentary: The secret behind building client trust