Tackling financial complexity – together

No one likes to feel left in the dark when it comes to their financial security. However, the reality for most couples, particularly those in higher income brackets, is that one person usually has a greater awareness or control over financial matters – even if it’s purely for the sake of practicality.

In our experience, this situation can lead to setbacks and delays down the track, even as couples do their best to keep each other informed. In this article, we share our insights from working with professional couples who have tackled the pitfalls of financial complexity together to achieve the financial goals faster.

The majority of our clients are executives, professionals or business owners working in fields as diverse as health, bio technologies, pharmaceuticals, technology and construction.  Many are either married to, or partnered with, another high earner and between them they generate a very significant combined household income.

In our experience, busy professional couples will typically split household duties, and one half of the couple usually takes on the administration of their combined financial affairs.

However, with so much money at stake and the added overlay of significant complexity, one person taking on the role of sole decision maker can be problematic if something untoward were to happen, such as illness, injury, death or even divorce.

Unanswered questions can lead to doubts that then slow down or even prevent important decision making. Below is a series of example scenarios that highlight some of the typical issues we’ve seen arise for our clients. (Names have been changed to protect privacy).

Peter had found an investment property that he believed would add value to their financial position, but his partner Anne who hadn’t been involved in the lead up financial planning discussions, was worried they couldn’t afford it.

Purchasing the property was very much part of the financial strategy Peter had explored with us and the couple’s financial position supported the purchase. However, Anne did not have all the facts as she hadn’t attended any of our financial planning meetings, preferring to leave it to Peter. Consequently, her concerns about whether or not they could afford the property stalled decision making.

Anne was eventually informed, but not before missing out on that particular property. Some months later, Peter found another property and, with Anne’s blessing, was able to go ahead and make the purchase with confidence.

Similarly, Michelle takes care of the family finances because her husband Shane is an executive manager who simply doesn’t have time to attend to their financial affairs.

Michelle recognised that Shane was getting older and it was time to think about retirement.

Shane worried they wouldn’t have enough to retire because he had no idea of the family’s financial position. Shane continued to work many stressful hours until Michelle insisted that he attend financial planning meetings with her. Satisfied that the family ‘books’ were in order, Shane has now stepped back and is looking forward to his retirement.

Then there was the case of Jason who takes care of everything financial, because his partner Jill, also a professional, spends any free time outside her significant work commitments, ferrying their school aged children between school and activities.

When Jason suddenly had serious illness, amid the shock and distress of it all, Jill had to rapidly gain an understanding of their significant and complex financial affairs. We were of course able to help and reassure Jill, but it was tough going for her all the same in very difficult circumstances.

A common thread in these scenarios is that it’s common for the financially less-informed half of a couple to delay decision making due to uncertainty, and when circumstances dictate that they must take control of their financial affairs, they often feel overwhelmed by the sudden exposure to complexity and sometimes, enormity, of their affairs.

In our view the solution is clear. Couples who share their financial responsibilities and support each other in financial decision making not only enjoy a sense of control, they achieve financial outcomes faster. They are also more financially aware and have confidence in the knowledge that they can pursue goals and make decisions for better or worse, even if that means addressing illness, injury, death or divorce.

If you can relate to any of these scenarios, may we suggest the following:

  • share this article with your significant other
  • ask your partner to share financial management duties; and
  • invite (or insist) they attend progress meetings with you and your financial planner.

May we also suggest you each take our 5 Minute Health Check. This fast and easy to complete financial questionnaire often delivers surprising responses. Many couples who appear to be on the same page often have very different financial and lifestyle goals.

For more information about financial planning and our approach, which includes regular financial progress (review) meetings, please contact Brett Cribb on +61 7 3007 2080 or email contact@executivestrategies.com.au

Executive Strategies is a specialised information hub for executives and senior managers who may have founded their own business or who work for growing private, ASX listed companies or government businesses. Its purpose is to provide access to specialist advisers and information that addresses the often-complex issues affecting their personal prosperity.

Stratus Financial Group and its advisers are Authorised Representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306. This is general advice only and does not take into account your objectives, financial situation or needs, so you should consider whether the advice is relevant to your personal circumstances. You should also read the relevant Product Disclosure Statements (PDS) before making any financial decision.

Please note: Advice and services not offered under the Fortnum Private Wealth AFSL are referred to appropriately qualified professionals. We are unable to give direct property advice, however we provide strategic advice on affordability and how direct property complements other wealth creation strategies our clients may have in place.

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