As you sit there reading this editorial in 2019, you may be surprised to hear that the majority of women still defer financial decisions to their husbands. Or, as financial advisers, perhaps you see proof of this every day in meetings with clients.
Well, it is still an issue. And because of the perils inherent in one person relinquishing all financial knowledge and decision-making to another, even a spouse, advisers must actively work to improve the situation.
A recent UBS survey found that 54% of U.S. women said their spouse takes the lead in handling the family’s finances beyond paying bills. These women did not participate in long-term financial planning, investing or health-care decisions. An even more surprising fact is that this reality is not limited to an older generation stuck in antiquated gender roles. As InvestmentNews senior reporter Mark Schoeff Jr.’s cover story earlier this month noted, that same UBS study showed 59% of women ages 20-34 relegate financial issues to their husbands.
Why do these “separate spheres” of spousal responsibility persist? It turns out society is slower to evolve than we realize. A survey of American adults conducted earlier this year by CreditCards.com found that males were more likely than females to learn about investing from their parents (25% to 19%), and women more often learn about giving from their parents (40% to 35%).
Surely it’s natural, and more efficient, for a couple to split up duties, given the seemingly unlimited demands competing for their time. But finances are core to a person’s well-being, so not knowing what is happening in that realm is tantamount to ignoring one’s own physical health.
As Stacy Francis, CEO of Francis Financial, explained in Mr. Schoeff’s cover story, “Kept in the Dark,” in the July 8 issue of InvestmentNews, during transitions such as divorce or the death of a spouse, women are often “starting at ground zero when there’s chaos and many moving parts in their life. It’s the worst time to try to understand your finances.”
This often results in poor financial choices.
“Either they’re completely immobilized out of fear and they don’t act at all, or they make a really quick, bad decision,” Ashley Coake, owner of Cultivate Financial Planning, said in the same story. “In both cases, had they been in on the planning all along, things would have been very smooth.”
A client of Karen Van Voorhis, director of financial planning at Daniel J. Galli & Associates, lost her husband this year. In her 40s and full of grief, the client had to find out how, or even whether, her mate had been filing their taxes. Ms. Van Voorhis’ firm helped the client hire a CPA, who petitioned the IRS on her behalf.
“It took weeks to get it straightened out, and that was a shame,” Ms. Van Voorhis said. “It was such a distraction. It’s really difficult for a surviving spouse to inventory everything.”
Because of the obvious mess resulting from one person’s being omitted from decisions of serious consequence to their well-being, the status quo in handling a couple’s finances is not good enough.
“The onus is on the financial adviser to include the wife as a core contributor to the financial planning process so that each has an equal voice,” Vance Barse, wealth strategist at Manning Wealth Management, said in Mr. Schoeff’s cover story.
Advisers must resolve themselves to do two things: 1. Not exclude a woman (purposely or unwittingly) from discussions and decisions about a couple’s finances, and 2. Ensure that any female partner not expressing interest in this realm understands why engagement is critical.
In addition to helping clients, financial advisers have a self-interest in this endeavor. More often than not, a wife survives her husband and becomes the sole financial decision-maker. In these cases, do you want the female client to return to you, or find an adviser more willing to place her center stage in the financial life she now controls? It benefits everyone involved to lay that foundation early.