Women's Money Wisdom

Episode 175:Financial Planning Discussions for Couples

• Melissa Joy, CFP • Season 3 • Episode 175

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Have you ever wondered why so many couples struggle to get on the same page with finances? Are you in a relationship where one person is in the dark on the overall financial picture? In this episode, Melissa Joy, CFP ® and Melissa Fradenburg, AIF ® tackle the all-too-common issue of one partner being left out of financial decisions. It’s not just about understanding finances but also about encouraging participation from both partners for balanced decision-making. 

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Links are being provided for information purposes only. The information herein is general and educational in nature and should not be considered legal or tax advice. Tax laws and regulations are complex and subject to change, which can materially impact investment results. Pearl Planning cannot guarantee that the information herein is accurate, complete, or timely. Pearl Planning makes no warranties with regard to such information or results obtained by its use and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Consult an attorney or tax professional regarding your specific situation. Please note, changes in tax laws or regulations may occur at any time and could substantially impact your situation. Pearl Planning financial advisors do not render advice on tax matters. You should discuss any tax matters with the appropriate professional.



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Speaker 1:

Welcome to the 52 Pearls Weekly Money Wisdom Podcast. I'm Melissa Joy, a certified financial planner and founder of Pearl Planning.

Speaker 2:

And I'm Melissa Friedenberg, financial advisor with Pearl Planning.

Speaker 1:

Pearl Planning is a financial planning and investment management company located in Dexter and Gross Point, Michigan. We work with clients all around the country.

Speaker 2:

The purpose of our podcast is to explore specific financial topics and provide advice you can use in your everyday life.

Speaker 1:

Welcome back to the 52 Pearls Weekly Money Wisdom Podcast Today. It's a treat. It's Melissa Joy here, but I am joined by my co-host, melissa Friedenberg, and, as you regular listeners know, it's not often that we record the podcast together.

Speaker 2:

So the gang's all here, Melissa. Melissa, the original decided to be back chatting with you And we actually got to see each other in person this past week, which is also a rare treat, which inspired this episode.

Speaker 1:

That's right, we often operate in virtual rooms. It's amazing because I feel like we see each other all the time but we don't see each other in person that often. But we got together last week for a book group. I actually contributed a chapter to a book called More Than Money and we got a group of women together at Melissa Friedenberg's house to talk about the book, which was great dynamic discussions People who are there's overlap with the listeners of the podcast, i think, but people who were really interested in money, either as a hobby or just learning more about being more serious about their own financial lives, which was a great discussion.

Speaker 2:

Yes, it was And, by the way, congratulations. That is just awesome to contribute to a book like that And it's a fabulous book. I found it even being in this business. I learned from it And it's really interesting to hear real life stories of financial planning. So I'm going to link that in the show notes to this episode. So if you're looking for a good book, not necessarily Beatrice, but if you want to find out more about financial planning, could give you some good Beatrice as well. But I will link More Than Money. Just a great job contributing to that, melissa.

Speaker 2:

So we celebrated her and we got to be in person and then we get to meet some of our listeners. It was a great conversation.

Speaker 1:

It was a great discussion And one of the topics that came up that night is what we wanted to discuss today, because I think it's under discussed and people out there that might be struggling with this. So one of the participants in Book Night mentioned that she was looking for a financial planner for herself. Her husband has someone that they work with, but she doesn't feel like she has information based on that. They kind of divided and conquered when it came to family decision making and she was in charge of raising the kids and kind of household And the finances were not in her court And she finds herself decades later feeling like she needs to start basically learning about the money for the family. Gosh, this is a great topic So I thought we could tackle it today.

Speaker 2:

I think a lot of women feel that way. She is not alone and I think that was like an aha moment. As a financial advisor, We work with married couples and individuals. There are certainly spouses that don't want to participate, but it just was mind-blowing to me that she had never participated. I mean, when you're raising kids and doing all the things, and especially if you have multiple kids and lots of activities and you work, I mean there's there, you have to delegate some things, But how do you get brought back into that, Like if you haven't been involved?

Speaker 1:

I think is a good I agree, but my first instinct is to evaluate the financial advisory relationship that you currently have, or your spouse does, and see if you can get into a better situation. For me, it's critical that when you're a financial professional, you are bringing everyone in the room and giving them agency to participate in the financial planning process, especially with marital assets, any of the assets accumulated during the marriage outside of inheritance or an unusual separate asset. And so what does that look like? To me, it looks like inviting people to participate, meeting them where they're at.

Speaker 1:

So if one person has been making most of the investment financial decisions over the life of the relationship, asking the other person in the room, do they understand what's going on? Are there questions that they have or parts of the agenda that may not have been on the other partner's list? that should be in order to give them kind of equal footing in the room. It's as much as I contact who the professional is speaking to in the room. You need to, when I think about it, make the person who may be least comfortable in the room feel the most welcome. So I try to tip the balance. If I notice an imbalance in knowledge and there's a joint meeting, i try to actually tip it over, so I'm paying as much or more attention to the spouse who may be the least likely to participate, so that they know, even if they don't feel like they're creating the agenda, that they are very welcome in the room And one of my goals and roles as a professional is to make them comfortable and confident and knowledgeable about their money.

Speaker 2:

I think this also comes down to financial planning versus just managing investment.

Speaker 1:

If you have a financial advisor.

Speaker 2:

Maybe you have somebody who is investing assets for you. But I have to believe that if the wife has not been invited, there was no issues there. She was being excluded. They're probably not having conversations about their holistic financial picture because she's part of it, whether she worked or not. I mean her life and life expectancy and what she plans to do or wants to do in retirement. She's part of that. If you're a married couple, it takes two people to kind of figure out what the plan is. So I am suspecting that there was not a lot of financial planning going on in this relationship. Would you agree?

Speaker 1:

Yes, although I will tell you another topic that came up in that meeting, because there were so many great chapters written by people who specialize in working with a very niche area of financial planning. So let's say the niche was I only work with veterinarians who own their practices or something like that, something very granular.

Speaker 2:

Yeah, one of the things.

Speaker 1:

Yeah, this is this is me as a geek but that's a big trend in our profession Because then you can dive really deep and be a great expert in this one unique area.

Speaker 1:

So I worry that this trend of the niches results in kind of over accommodating one member of a relationship. So it may be that there was financial planning and this isn't. I don't think this is this case. But when you have someone who is so technically specific to one person's profession, occupation or situation, then they may be very planning focused but not built to focus on the other spouse.

Speaker 1:

So let's say there's a vet and a doctor, but you know this planner is the veterinarian professional. So just keep that in mind. But in general, yes, i think you know in many cases it's because this is my person who handles things and they really only report on the accounts and they're they're trying to accumulate as much money as possible, often for retirement, but they just don't have that kind of bedside manner that focuses on your whole life, your whole resources, which it, as a professional, really makes us make sure that we're addressing the whole family's issues. So it is a little more naturally in the financial planning process you would naturally be trying to talk to both people in many cases, And it brings it back to.

Speaker 2:

I know you mentioned why we necessarily wouldn't want somebody to have their own financial advisor, because it is a group process If we really like when both people are involved, at least in the beginning.

Speaker 2:

Maybe you know work schedules are crazy and not both people can't be at every review or meeting, but again, that is something where you know when you look at your ideal client it would be that they're working together for the same goal. I think that and truth now my husband and I have not always been on the same long term plan It really helps when you are. I'll say that it improves your marriage dramatically. And I just felt for a long period of time again that period when I was really involved in the little kids and that whole process and kind of deferred a lot to him. I was the spender but he was the financial manager of our house And that dynamic is not fun. It was not fun for me. So by bringing both people in and kind of rowing the boat in the same direction or at least knowing what the goal is, i think really can improve that communication all around in your relationship.

Speaker 1:

One of the founding kind of grandmothers of financial planning who I got the opportunity to meet, who was one of the early CFP professionals, once told me that a financial planner can be a bridge between two individuals who are in a relationship, and your job is to listen, to acknowledge each of their different financial histories and journeys and perspectives You're not a clone of your spouse or partner and help them to be, each, be heard and help to create a planner path that acknowledges both of them.

Speaker 1:

And so what we're describing is a path that just doesn't identify with one of the people, and I think it might be helpful at this point in our conversation to say what can you do if you find yourself in this moment, because oftentimes I think it's unconscious, it's just like a divide and conquer, and then you're in your habits and routines And you know, same goes, the other partner might not be as comfortable in car line or at the PTA meeting, but there's an opportunity once you've identified Hey, i feel some disparity in terms of either my knowledge or my agency, my ability to know and act on my financial situation that I would like addressed, and to me, i mean, this can feel like a strange conversation to bring up in a relationship Like this is really important to me, but it might not feel as important to the person who has the knowledge and the information, and that probably isn't a, you know, trying to keep the power dynamic the way it is.

Speaker 1:

It's just like a lack of understanding, which in many kind of power and balances can be the case. But acknowledging it first which might be an awkward or strange conversation, i think is is the first best step.

Speaker 2:

Well, and certainly honesty and just coming out and saying, hey, i'd like to be more involved in the finances would be a good approach, but it's not everybody's approach And I feel like, if it is a question of maybe feeling awkward bringing it up, i like to talk about, you know, the idea that maybe somebody that you know inspired this conversation, whether it's somebody who their spouse passed away right, somebody maybe that you know in common, who maybe didn't have any idea what was going on. We see it every day with women post divorce. Realistically, especially if your spouse is a little bit older I mean women, our life expectancy is longer, so we're going to be. If you're thinking about, you know, is this money going to last us?

Speaker 2:

In my life, it would be aging parents, both JMI, our parents, watching them age in place and maybe not aging in place so well and having to step in. Those are good conversations segue. So it's not an approach of like, hey, i want to know what's going on. This has been a secret to me, but this got me thinking about what our future looks like in retirement or, you know, end of life. What do you see our situation looking like?

Speaker 1:

Yeah, and I think if you do have a professional that you just don't feel like you have that engagement with, but your partner does, then you could ask for another meeting, which is just an explainer meeting instead of the agenda of you know, here's your returns and here's what happened last year. This is your allocation. You can have a let's set the table meeting either with both of you or perhaps separately, because if you find yourself in this situation, there may have been quite a few meetings that were separate in the past just because of what the family dynamics were. But give that professional a shot by also identifying hey, i'd like to catch up on what's going on. What is our retirement plan, gosh, i hope that's an incorporated into the professional conversation, because that's something we often find to be missing where there's just an investment discussion and the you know how much can I spend in retirement? What is realistic? Can we maintain our lifestyle? What are the tax considerations of these investments? Those are often missing.

Speaker 1:

But, given the benefit of the doubt, having a discussion where you give a chance for a reset so that you feel more knowledgeable, and a couple of things that you should feel comfortable with, that should be an expectation.

Speaker 1:

One is that you they're meeting you where you're at. And two, if you don't understand something in the discussion many people don't understand things You need to work with a professional where you can be comfortable to say, hey, can you pause there? I don't, i don't have any idea what you just said. I know you said something really smart. It's not like in my language, so please help me understand. And you need someone who both has the capacity to explain things in real world language, but also that you feel comfortable with asking them.

Speaker 1:

the old version of our profession is just to look like as strong as possible and like bulletproof as possible and not be very engaging at where you're at, and I think that is the old school world of investments that needs to go away, you know, with the madman world, and we very much deserve, you deserve a person who is going to make you feel comfortable saying when you understand when you don't, and will answer and be patient with you And it's not that's like part of our job, so it's not even a great job, by the way, like compliment.

Speaker 2:

I want people that feel comfortable asking questions. I don't want you to be involved, i want you to ask questions and I'd much rather have a conversation and explain things to people than talk like the peanuts character, go on and on an industry jargon, right.

Speaker 1:

Yes, and this may be controversial I think the vast majority of financial advisors, financial planners, have the skill sets to say Oh gosh, i didn't realize like you want to become more involved. Here's how we can do it. Here's how I can make you feel more comfortable and involved and engaged and give you that sense of agency that you deserve. If they don't get it, if they're still deferring, if they're not inviting you to the meetings, if there's a disconnect there with a professional And, like I said, this is should be the minority, i'm not assuming that most people, i think, would get on the bus and get you up to speed.

Speaker 1:

But if not, you deserve to work with someone who represents your interest and communicates with you and has the ability to work with you on the same level as your partner. So that is to be a non-negotiable. If you're in a long term engagement with a professional who just can't kind of engage or connect or communicate with you or honor you as a part of that engagement on marital assets, then that is a red flag and, to me, a time for change, because it is really important for you to understand. To the extent that you're interested in understanding what your financial life is, it makes a huge difference in your whole entire life, and so it can be so, so important, and that is not something I would compromise on.

Speaker 2:

Now you mentioned red flags. This so far what we've been talking about is, again, not intentionally being left out, but maybe choosing to be left out of the finances due to just delegating other things or not having an interest in it. But maybe now you're interested in kind of figuring out what you have and being a part of those meetings. Let's talk about where we unfortunately do see in this business, where there are cases where somebody is being kept in the dark for a reason, whether it's control or things aren't what they seem. What are some of those red flags that, if people are listening, thinking like am I being excluded from the finances for a reason that people should look for?

Speaker 1:

One of the things that I see most often not with our clients.

Speaker 1:

It's more in cases where we start to work with people during their divorce.

Speaker 1:

So this is I think having a financial planner relationship can be very helpful in avoiding this but unexpected surprises where either money's being spent that you weren't aware of or debt is being racked up that you weren't aware of And this is often a case of financial infidelity, where there's just not knowledge being shared and one spouse is spending money to access and hiding it by borrowing money instead of using the family's funds, or else having separate accounts that you aren't aware of, very different than just kind of a dynamic where you got to a point where one person handled the money and the other person handled other parts of the house.

Speaker 1:

This is not the example we heard at book group, but there can be cases where, time and again, you find yourself cleaning up your partner's messes or just finding, you know, being shocked to find out that there's tens or hundreds of thousands of dollars of debt that you were not aware of And you know any type of information that's hidden, that, or if you're being controlled where you aren't allowed to spend money in terms of assets, then those aren't red blacks. That may require either therapists or attorneys as well as financial professionals, and in that case I do think having a separate financial planner may be appropriate.

Speaker 2:

But I, especially when working with people in divorce where there are surprises, 99% of the time it turns out that they signed something that they didn't really know what they were signing. So whether it's a home equity line of credit or you know tax returns that they maybe didn't look at at all and just signed off on. So there are things you can do if you find yourself in that situation in a divorce where all of a sudden there are surprises, to kind of protect yourself. But just ask questions when you're signing something with your spouse. It's not an issue of trust. Maybe you trust them But say what is this about?

Speaker 2:

What is this for Your per? If you're putting your signature on that, you are going to be liable, just like these are your assets, what you're building and accumulating throughout your marriage. If you're accumulating debt, you are responsible for that in your marriage, if you know both when you're married and then if you get divorced. So I would just say a lot of people do it, we see it all the time. But just ask questions when you're signing something.

Speaker 1:

That tax return is a big example. But in both our kind of beneficent situation or one that's darker you sign You likely sign off on a tax return every year. But filing a tax return joint versus filing as married filing separately is an advantage to the married couple typically. And just ask you know, understand, how do we do last year? What was our income? These are all things that in a good financial planning engagement you would also be discussing. For example, we are in the time period where we're asking our clients for their tax returns from 2022.

Speaker 1:

And we have an even an explainer report where we show them hey, here's what's going on, Here's some tax planning ideas for next year. So that can be a great time to kind of understand things more. But the You've got to be thinking, you know, hey, I'm signing this document, I'm telling the federal government that I certify that this information is correct. You deserve the information that is in that filing, And so that is certainly a place to start.

Speaker 1:

Hey, can I have a copy of that So I kind of understand where we're at? or hey, we made like $400,000 this year and I'm getting you know kind of pushback on our grocery bills. We need to talk more or things like that. So I do think that that is a great document And then search your credit report, because in some cases there could be joint credit card debt that you're not aware of where they're using some of your good credit. And, like I said, that's not the main point of this discussion, but there could be a cohort of people listening who really feel that this episode is about them, where there is that other line being crossed, where it's either a control thing or there's some deception when it comes to family money.

Speaker 2:

Absolutely. If you're listening to this podcast and this is resonating with you and you feel like either one I feel like I've been left out of the financial planning conversation, or you feel maybe there's some red flags that you're being left out of things for a reason, do reach out, because you can always have a consultation and figure out if maybe there is the need for a new financial planning relationship or just get some things lined up in case you do feel like maybe there's some red flags there and something going on that the marriage may not last. Definitely worth talking to somebody about what that financial picture looks like and we can help you figure out what to look for.

Speaker 1:

Yeah. And to circle back, i would say that if you take the steps over the summer to say, hey, here's what I'm seeing and here's how it makes me feel when I can see the statements, but I don't have all the information to understand what these accounts mean, and then how can we understand it together better? I think that is a great step In the opposite of what we were just discussing of do you need an attorney. that's a great step to a healthier relationship. Having confidence and comfort on money and reducing financial anxiety or financial ignorance is a very healthy exercise. So if any of you happen to have those discussions I'm excited to hear back. Please reach out to us and let us know how it went.

Speaker 2:

We love if you share our podcast. We've heard from so many of our listeners that a friend introduced them and that just makes my heart so happy. So if you are listening, you found this helpful and you think somebody that you know may find it helpful as well. We love when you share. And also if you could go and review our episode and let us know what you think, we love that as well.

Speaker 1:

Yes, thank you so much for listening. One last little note we will be having a geeky economic and investment outlook update this July, on July 19th, but you can register for it now on our website. It's a webinar and if you sign up and can't attend when it happens at 11am on the 19th, then we'll send you the replay. In that kind of format we do deep dive more into the investment side of things, hopefully in a way that feels both informative as well as approachable, and that's a great way to get started. If you feel like you need to go to a little investment and economic boot camp so that you have a little more knowledge and ability to ask questions and talk about things, so don't hesitate to sign up. It's at pearlplancom slash events.

Speaker 2:

And we will link it below, and when you go to our website, pearlplancom, you can sign up for our newsletter so you hear about events like the book event that we had and also our webinars, and just kind of start getting involved more and educating yourself on the financial side of things so that you have a better understanding of what's going on in your own situation.

Speaker 1:

So, with that happy Independence Day. Knowledge is power and independence. I would say So your financial agency is something that could be your theme for this year on the 4th of July.

Speaker 2:

Absolutely. Thank you for listening.

Speaker 1:

You can access our first two seasons of this podcast on our website at wwwpearlplancom or on Spotify, if you're interested in learning more about pearl planning, feel free to sign up for our newsletter, also found on our website.

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Melissa Joy, CFP

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