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In Practice

Marriage, Money, and the Role of the Advisor

Why advisors should help couples navigate through financial tensions

Everyone’s got an emotional, complex, lifelong relationship with money. Unfortunately, this relationship is rarely examined—until a close romantic relationship or marriage brings together not just two people but also their money habits. Financial disagreements, particularly when couples aren’t communicating effectively, can cause tension and threaten relationships.

Advisors who have couples as clients probably have noticed these tensions, disagreements, and arguments. This presents the question: Should financial advisors address these issues with couples? Does an advisor even have a place confronting these tensions?

In her paper “Financial Turning Points: Relationships, Marriage, and Divorce,” Morningstar behavioral economist Sarah Newcomb, Ph.D., explains that these tiffs can be opportunities to add value and to make sure the arguments focus on what’s important.

Here are a few reasons why it’s so important for advisors to help couples with these conflicts.
 

1.    Financial disagreements are a leading cause of damage to relationships

“Financial disagreements are—according to some studies—the strongest predictor of divorce,” said Newcomb, who’s also the author of the new book Loaded: Money, Psychology, and How to Get Ahead without Leaving Your Values Behind. “And this is not financial hardship, but financial disagreement. People can have financial hardship, but if they’re better at communicating about money and they’re hurting each other’s feelings less when they do communicate about money, they’re still more likely to stay together.”
 

2.    Advisors are well-positioned to help couples have productive financial conversations

Newcomb notes that having productive arguments about money can actually bring couples closer together—even though it’s ugly and uncomfortable to have those conversations.
“People need to be able to have productive arguments about money,” she said. “Your clients should learn how to have the arguments that, at the other side of the argument, they’re closer to a resolution than where they were when they started.”
She continues that this is where advisors who learn some negotiation skills can really excel. “When advisors learn how to help people argue more productively, they can be there as a mediator to help them argue about money,” she explained.

3.    Advisors may be the only ones who can address both relationship and financial issues

“Advisors may be thinking, ‘I’m not a marital counselor. I’m not licensed here. Leave that for their marriage counseling,’” Newcomb said. “The problem with that is that most marital counselors do not understand money. 
 

This blog post is adapted from the white paper, “ Financial Turning Points: Relationship, Marriage, and Divorce.

Read the full paper "Financial Turning Points: Relationships, Marriage, and Divorce."
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