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It’s frequently said in this space that advisors should not get involved in the day-to-day issues that married couples encounters. Of course, the obvious exception is money matters. In those cases, advisors should be involved because finances can be significant sources of strain in marriages.
However, there are myriad pre-marriage financial issues committed couples need to address. Specific to engaged couples, one of the big pre-marital financial considerations is the wedding itself. Put simply, weddings are expensive, aren’t getting cheaper, are stressful and are a topic worth addressing with advisors. That’s not to say the advisors themselves should be nosy, but there is value in discussing wedding expenditures with clients.
Not to be trite, but this particular conversation isn’t as awkward as talking about prenuptial agreements. Plus, there’s a chance that clients that are consumer by pre-wedding bliss could eventually come to appreciate an advisor helping them realize benefits in dialing back wedding spending. Speaking of which…
Wedding Costs March Higher With, Outpace Inflation
Count wedding as among the life indulgences that have been bitten by inflation. For the couples and their families that are shelling out on these events, that’s frustrating in a variety of ways, including the point that over the past several years, the average guest list has declined in size, but costs have risen at such a rate that there’s essentially no benefit to smaller attendance.
In 2019, the average number of guests at a wedding was 131, but that declined to 115 last year, according to The Knot. However, the average cost per guest swelled from $214 to $304 over that period. Said another way, wedding inflation has been roughly 25% or almost $7,000 over the past five years even as guest rosters declined.
“Among this group, couples helped mitigate these challenges by increasing their overall budget (60%), becoming more selective with upgrades and add-ons (53%) or trimming their guest list (40%). Those who had a destination wedding spent an average of $41,000 on their ceremony and reception, while those who had hometown weddings spent an average of $33,000,” notes The Knot.
It’s good that some engaged couples are taking steps to trim costs, but there’s considerable value for couples in pondering the following nugget. Let’s say for the sake of argument that the average wedding costs $35,000. If a couple spends just $5,000 on a very intimate ceremony and reception for a small number of close family member friends, they have $30,000 left over. Over a decade, assuming no further contributions and an average annual rate of return of 6%, that $30,000 grows to $53,725.
Hard to Talk Clients Out of Wedding Spending
No one wants to be a “Debbi Downer” and that could be the perception when it comes to attempting to talk clients out of big wedding expenditures. Data indicate it this could be a difficult endeavor.
“Data on weddings in 2024 from our most recent economic survey conducted in January found that about 7 in 10 engaged couples reported that the current economy has had an impact on their wedding planning. Among those who are making changes to their wedding to help alleviate some of these effects, couples are making modifications to what they originally planned such as changing their decor (60%) or reducing their guest count (46% are reducing by an average of 29 guests),” adds The Knot.
Point is even a little bit of progress with engaged couples or their parents who are clients and footing the bill for weddings can go a long way toward clients feeling valued by advisors.
Related: Demystifying CLOs for Clients