Investing for two – for the long run
Joel Dresang: Isabelle, when you’re managing investment portfolios you customize those for the individuals, but a lot of your clients are actually married couples. How is that different?
Isabelle Wiemero: When you’re working with couples, it’s a whole different dynamic. You have two different personalities and two different ideas for how to manage money, and it’s really important that we understand and embrace those differences. Many studies have shown that the number one thing that people report as being a problem in their relationship is money.
Joel: And there are a lot of studies too that show that married couples divide the tasks of the household. I imagine finances is one of those?
Isabelle: That’s right. Many times couples will divide all their household tasks between what each spouse’s strengths are, so naturally the person who normally ends up in charge of the family’s financial matters is the one who’s more interested and more engaged with the numbers and planning of it.
Sometimes that happens because that spouse wants to be the one who’s in control, and other times the other spouse will say, “Well I want nothing to do with it,” because it either stresses them out or they just don’t understand.
Joel: So, what’s wrong with that? What’s wrong with just having one person engaged?
Isabelle: Well unfortunately it’s likely that one spouse is going to outlive the other. Statistically speaking, that person is going to be the woman. Now if the woman in the relationship is also the one who wasn’t as engaged, that can pose a really big problem when they’re left to figure out all of this on their own, especially during such a hard emotional time.
Many couples don’t want to talk about one spouse being gone, so they won’t plan for it, but it’s really important that you have those tough conversations.
You want to be able to rest assured that if something were to happen to you, your surviving spouse would have the tools that they need.
Joel: The Census Bureau estimates that between the ages of 65 and 74, about 25% of American women are widowed, and by the time they’re 85 three quarters of American women are widowed.
Isabelle: That’s right, and it’s not just death that this could happen with. We’ve also seen many people struggle to find financial footing on their own after a divorce, or after a spouse became suddenly disabled and could no longer help out.
Joel: Even aside from that, I imagine it’s always better to have both partners involved. Two heads are better than one.
Isabelle: That’s absolutely right. Remember, you have two different personalities coming together with different backgrounds and different ideas for how to manage money, and that can create an environment for some good conversation and planning between the two of you. And it’s not only that, but it can just be great for your relationship to have that open communication. You know, you begin to really understand what’s important to your spouse and what worries them.
Joel: So what can couples do to be more engaged in their finances?
Isabelle: Well first, both partners should be involved with meeting with their advisor and other financial professionals, and have a relationship with them. If only one spouse had been going to all the meetings with their advisor, if that spouse were to pass away first, their surviving spouse may not feel comfortable or know who to turn to when they have to figure things out on your own.
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But just being there isn’t enough. You both really want to be engaged, be asking the questions. Understand what assets they have and what they’re intended for.
And it’s not even just with retirement accounts, but also your day to day finances like your checking account and your savings account. You want to know what’s coming in, what’s going out, what bills you have, and how you’re paying them, because it’s likely that one of you is going to have to do this on your own one day.
Joel: Do you have any personal advice?
Isabelle: I do. I’m recently married, so my husband and I just went through a lot of talking about this. Talking about our own finances and how they’re going to come together. It’s been really good for us, because we understand each other even better now and feel like we’re approaching this like a team, and we feel good about our future because we’ve started out our marriage with open communication about how we plan to spend, save, what our big financial goals are, and how we’re going to get there.
Isabelle Wiemero is an investment advisor at Landaas & Company.
Joel Dresang is vice president-communications at Landaas & Company.
Money Talk Video by Jason Scuglik
(initially posted Oct. 22, 2015)