By tradition, June is the most popular month to marry. And financial harmony is one of the most important elements of a successful partnership. So for this week’s Barron’s Advisor Big Q, we asked financial advisors: What’s your best advice for those who are tying the knot?
Amanda Campbell, financial advisor, Wealthspire Advisors: I urge all my clients who are in the newlywed phase to sit down and set some short-, intermediate- and long-term goals. For short-term goals, what do you two want to accomplish in the next one to three years? Is it buying your first home? Making sure you’re both maxing out your 401(k)s? Going on a nice little vacation if you didn’t get to do the whole honeymoon thing?
What about intermediate, the next three to six years? Having a baby? Changing jobs? And then long-term goals for six-plus years out. That can be a really fun conversation: “We’d love a beach home one day; we’d love to go to Italy for two weeks.” Have the conversation over a glass of wine and just enjoy it. I actually think a lot of these newlywed conversations should happen before the big day, in the engagement phase. Because as someone who specializes in divorce, I can tell you that a lot of times money is the issue. I like to tell couples, “Why don’t we talk about all these big important things while everyone’s happy and in love?”
Erin Scannell, CEO, Heritage Wealth Advisors (Ameriprise): What I wasn’t taught as a young person is that a wedding is not only a relationship agreement, it’s an enforceable legal contract, with multiple significant legal and financial implications. It’s a contract where down the road, in the busy-ness of life, something as innocuous as an oversight or errant signature can mean losing the rights to millions of dollars of family money.
We’re encouraged to get the advice of an attorney prior to signing all other contracts, yet very few people do that prior to a marital contract. And I understand why: Marriages are about love and making a life together. Money is a difficult subject to talk about in any circumstance, and when intense emotions are involved, it becomes even trickier to discuss.
But it’s important. And thus, we encourage the young people in our clients’ families to have open and healthy discussions. We help them figure out the best way to broach these subjects with grace and love, in a way the other person can receive it in a positive light. We encourage each of them to individually get at a minimum advice from a wealth advisor, and better yet have it supplemented with advice from an attorney.
Boryana Zamanoff, senior wealth strategist, BNY Mellon Wealth Management: My big-picture advice is: Don’t get divorced. It’s one of the main detractors of long-term wealth accumulation. In terms of what people can proactively do, I think couples who get prenuptial agreements engage in some difficult but important conversations. They talk about assets and liabilities, student debt, their expectations around spending and investing, and maybe inheritance expectations.
Even for couples who don’t get a prenuptial agreement, which is still the majority, I find it is useful to have these money-related conversations early on in married life. And if it’s too hard to do it, hire somebody to help you negotiate those conversations and get off on the right foot in your financial life. I also find that prenuptial agreements are more common in second or third marriages; people have more to lose, or may have already lost. Now they really want to be clear about what’s theirs and what’s ours, what’s going to my children versus to your children or our children. I think they approach marriage in a much more pragmatic way.
Sylvia Guinan, financial advisor, Wells Fargo Advisors: My specialty is women in transition, including women who are getting divorced. So I see so much of it on the other side. If you look at the reasons for divorce, finances tend to be one of the top two or three. I believe that for newlyweds, transparency is most important. I encourage new couples to have what I call a conversation night, where they put finances on the table and understand that they each have different and similar goals, fears, and concerns. I think it’s so important to envision their future as a new couple, even though they’re young.
As I help clients who are getting toward retirement, 80% of them don’t even necessarily agree on what retirement should mean, because they hadn’t had a real discussion. What happens quite often in marriages is that it’s easy at first: You have a double income and no kids. All of a sudden the kids come, and roles start to get divided. As the years go by—and they go by pretty quickly—you don’t have time to sit and talk about the finances. And then it becomes almost awkward to talk about them. So I try to get my newlywed couples comfortable talking about everything early on. Those conversations are important.
Erin Wood, senior vice president of financial planning and advanced solutions, Carson Group: One area that couples don’t spend enough time [discussing] is how they are going to handle the month-to-month cash flow. Are you going to have separate checking accounts? Are you going to have a joint checking account? Or maybe you have one shared account and two separate accounts.
And I hope people have talked about this before they get into the marriage, but occasionally one person will have debt and the other one won’t. So who’s responsible for paying it? If only one person’s coming to the marriage with debt, are both people responsible for paying it? Or is it the responsibility of the one who incurred it? And then if you get to the point where you need to take debt on in the future, what are each person’s feelings around debt?
And when it comes to debt and cash flow, how will you handle things when money gets tight? Having that conversation before it happens can really minimize that stressor. Every single financial decision that the two of you are going to have to make either brings you closer to your goals or further away. Hopefully the decisions you make bring you closer together. And having open communication is the most likely way that that’s going to happen.
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