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Asking clients about their past experiences with money gives context for current attitudes and helps to understand a couple’s behaviour.vgajic/iStockphoto

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Money is a frequent source of conflict among couples. One survey found that fighting about money topped infidelity as a reason for divorce. So, how can advisors navigate situations in which partners disagree about their goals and the strategies required to accomplish them?

For Natasha Knox, founder and principal of Alaphia Financial Wellness in Vancouver, it’s essential to look through any misalignment and the different perspectives couples bring to the discussion to discover the actual financial situation, including current spending, sources of income and future needs.

Asking clients about their past experiences with money gives her context about their attitudes toward it today. It also helps her understand a couple’s behaviour and dynamics so she can start to guide clients toward a unified vision.

“It’s really important to listen to those stories,” she says.

For example, “they may have had past experiences in which … they lost [money] or it was taken from them and they no longer trust that if they save it, it will still be there in the future. So, it leads to a pattern of just spending for today because [they believe] it will be gone tomorrow.”

Ms. Knox puts some ground rules in place for conversations with couples. Each person tells their own story and does their own self-discovery work. The person speaking always gets to finish. Both people must agree to work together. She has a ground rule for herself as well – her job isn’t to try to change anyone.

Ms. Knox adds that it’s a good idea for advisors to explore their own experiences and perspectives on money.

Self-awareness can help them manage responses when clients arguing across the desk from them start sounding like their parents, adult children, or conversations in their own marriage. At that point, Ms. Knox says advisors need to remind themselves every couple is unique and that, while the argument may be familiar, the context is always different.

Same destination, disagreement on the route

Many times, Stephanie Hickmott, principal, portfolio manager, private clients and foundations at Leith Wheeler Investment Counsel Ltd. in Toronto, finds that couples share a general goal of wanting to retire comfortably with a certain lifestyle. Differences between partners often emerge around the best path to get there.

She also thinks those differences have their origins in each person’s lifetime experiences with money.

“My role is to ask the right questions, give each person in the relationship equal time to express themselves and talk about their experience with money, and just have an open conversation,” she says. “I have to be completely neutral. … I listen carefully and then present options that they can evaluate.”

The questions she asks are a mix of real-life and hypothetical situations – but she finds the real-life ones are often the most revealing. When did you start investing? What were your best experiences? What was the worst? Did you go through a difficult investing period like the global financial crisis and how did that make you feel? Have you opened an investment statement with a 20 per cent drop in value and how did that make you feel?

Ms. Hickmott finds that running models based on different scenarios can help couples understand the pros and cons of different routes toward their goals and find common ground. When there are still disagreements, she may structure the investments in each partner’s account differently – but she continues to build planning, forecasting, and scenario modelling from a consolidated view.

There’s the odd exception, she says: “There are a handful of clients [for whom] it’s just their portfolio and they don’t involve their partner at all. They’re in happy relationships. It’s just they keep [their finances] completely separate.”

Make a safe space for client conversations

A financial planner can really help by giving couples a little bit of “bubble time” to have a safe place to ask questions and explore some of the things they were raised to think about money and how that’s influencing their decisions, says Tracey McLennan, senior wealth consultant at Edward Jones in London, Ont.

That said, she emphasizes that advisors need to make sure they stay in their lane. Facilitating great conversations is appropriate, but knowing when to stop and where to refer when conflict runs deeper than an advisor is qualified to address is important.

One challenge couples face – something that can be a source of conflict – is that the specifics of retirement have become so varied. Instead of retiring from a full-time job at age 65, couples may be able to choose their retirement date and mix part-time, entrepreneurial, or consulting work with partial retirement. The more choices, the greater the opportunities to disagree. Also, partners may change their minds about what they want, and they’re not always in sync.

That’s why Ms. McLennan builds a lot of flexibility into the financial plans she prepares for clients. She stress-tests different levels of required cash flow and rates of return. She makes sure there are escape hatches – strategies that can be unwound without tax consequences. Sometimes, flexibility is as simple as ensuring access to borrowing options.

Overall, it’s to be expected that people will have other goals and prefer different approaches to reaching them. However, by facilitating constructive conversations, an advisor can strengthen the couple’s relationship and help ensure they implement their financial plan.

“Explore what and who is important, how clients feel, and what are those deep values that are going to influence their decisions,” Ms. McLennan says. “So that, as we are constructing a financial plan, it resonates with them and it’s something they will execute.”

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