Get your newlywed clients on the same financial page

By Chris Susel | June 12, 2013 | Last updated on June 12, 2013
3 min read

When two people decide to get married, it is very exciting for the couple and their families. There’s a lot of enthusiasm and, at the earliest opportunity, I endeavour to meet with my clients and their new partner to obtain an understanding about how they see their future. As the financial quarterback for my clients, it is important that I know about any life event and incorporate it into their financial plan.

The first thing I recommend to my soon-to-be married clients is that they have an open and honest discussion with one another about their shared finances. They need to know where they stand financially as a couple. Discussion of their mutual financial expectations and responsibilities involves determining whether they have the same views on spending, saving and investing.

As two partners coming together to form one household, there are both short-term and long-term financial issues that need to be discussed. I explain that it is critically important that both of them are involved in financial planning and decision-making. I tell them to consider their long-term financial goals — children, education, home ownership, vacations, retirement, lifestyle — and their short-term needs. If they agree on life goals, they are more likely to agree on money issues.

Newly engaged couples are usually more excited about their impending life together than things like cash flow and debt, so it’s the advisor’s job to focus the couple and to get them to create specific financial goals.

Of course, a couple’s financial objectives might be vastly different. A TD Waterhouse poll conducted a few years ago found that men and women have different expectations when it comes to how much money they’ll need before they can retire. The men surveyed said they’d need about $848,000 to retire, while women said they require $532,000. That’s a 59% difference.

The report also revealed that 51% of women worry about maintaining their current standard of living after retiring, versus only 9% for men.

Clearly, men and women are often on different pages when it comes to financial expectations, so it’s up to the advisor to bring these differing ideas more in line with each other.

But my goal in planning with my clients is not to change their behavior or spending habits. Rather, I show the couple options so they can decide what they want to do together. To accomplish this, advisors have to review essential documents such as wills, life insurance beneficiary designations, and powers of attorney for health and financial affairs that articulate each party’s wishes should they become unable to make decisions on their own.

It’s also important to review homeowners or renters insurance coverage for under-coverage, duplicate coverage, or lapses, as well as additions to life insurance coverage of spouses or partners if the death of either one would create a financial hardship for their family.

Using the basic facts about where the couple is today — things such as assets and liabilities, goals and basic savings — I can create a picture or several scenarios of what the future could look like.

It’s more than likely that you won’t know your client’s future spouse. If that’s the case, introduce yourself before the wedding takes place. Marriage and domestic partnerships often means combining assets, liabilities and responsibilities, so understanding where the partner comes from — if not representing him or her outright — will help lay the foundation for a happy financial life together.

As advisors, we are charged with the important task of making people understand the best way to spend and save their hard-earned cash, so while your newlywed clients are planning their honeymoon, it’s up to us to help sort out their financial future.

Chris Susel is an investment advisor at TD Waterhouse.

Chris Susel