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Advisors aren’t marriage counselors, but they might want to consider reading some books on that particular field. After all, it stands to reason that many clients come to advisors as couples.
Indeed, best to leave “therapy sessions” with clients, including couples, to financial matters. Don’t worry. There’s plenty of work to be done on this front, but advisors should view it as opportunity to better connect with clients and much like a good marriage counselor, advisors that prove adept at “financial therapy” could well earn referral business.
As advisors know, the money issues between couples have been around, seemingly, forever and that’s not going to change. In fact, and this is compelling for advisors, some generations take money matters more seriously and can be more easily scorned by these issues than others.
Obviously, there are many intersections between financial and relationship health and this issue often gets to the heart of behavioral finance matters. A new survey confirms as much.
Important Survey Details for Advisors
A recent survey by Forbes Advisor contains a slew of important data points pertaining to money matters under the umbrella of committed relationships.
Alarmingly, 38% of adults – emphasis on “adults” – fessed up to lying to their partners about finances. The most commonly used fibs pertained to debt burdens, specific purchases and spending habits. The survey doesn’t get into whether men or women are the biggest perpetrators of these lies or if financial omissions of truth are more common in male/female or same-sex marriages.
Advisors don’t need to know those details. Knowing that money woes often lead to relationship woes is enough. But there is more that’s relevant to advisors, including how the jilted party in a relationship feels about money lies. Fifty-four percent consider financial fibs to be on par with any other lie or infidelity, according to Forbes Advisor.
Again, advisors aren’t marriage counselors, but it could be worth imparting upon the offending party in a relationship how their financial cover-ups and misdeeds adversely affect their partner.
Confirming that there’s much work to be done on this front, 40% of respondents to the survey believe their financial lies were necessary to preserve the relationship. Talk about making a bad problem worse.
Another data point pertinent to advisors and it’s one likely applicable to male clients, is that 70% of those polled believe a partner that lies about having a large amount of money is committing an offense that’s far worse than “sandbagging” their financial situation, or saying they have less than they actually do.
Advisors: Know the Fibs
As noted above, clients that are part of a couple are more prone to lie about some financial issues over others. The most frequent fibs, according to the Forbes survey, are purchases (49%), debt (37%), pattern of spending (25%), income (23%), savings (20%), loans to others (10%), and gambling losses (9%), undisclosed credit card debt (7%), undisclosed bank account (6%), trading losses (5%), and trading earnings (3%).
Interestingly, there are some gender disparities for advisors to be aware of. Women are more likely than men to fib about their savings while, perhaps not surprisingly, men are more likely to be less than truthful when it comes to trading gains or losses.
The point: Regardless of a couple’s composition, the unfortunate reality is that there could well be financial lies and half-truths. Making matters worse is that those problems can beget larger ones, but advisors can play integral roles in preventing that and they don’t need to be licensed therapists to do so.
Related: Lean on a Bond Giant for Retirement Planning Solutions