When I started in the wealth management business over 25 years ago, I called myself the “CFO’s CFO”. I started my career at a Big Four accounting firm and when I entered the wealth management business, my first clients were my friends—largely my old colleagues from public accounting.
This was a group of very financially literate folks. It’s not that they couldn’t deal with their personal finances—They just didn’t have the time to do it.
Another benefit of working with our team—besides saving time—was that it created space for improved spousal communication about the family finances.
From the very beginning, we ran financial plans for nearly every client. Usually, one spouse would supply all the needed information. With that person, we would create a plan draft. Once we were on the same page, we would pull in the other spouse to review and refine the plan.
We had one early client, let’s call him “Jim” (we keep our client information private), who was married and had five children. They lived in a rural area outside of town. Jim commuted to downtown Houston for work. Since our office was in the city, it was convenient for Jim to come by and visit periodically. I would always ask Jim if we could include his wife in at least an annual meeting with us. He always said, “No, she’s too busy will all the kids and it is a long way for her to drive”. (This was before Zoom, which has become handy for this type of situation.)
Jim worked with our team for over a decade. In his early 40’s, he got a big promotion that came with meaningful stock incentives that he eventually exercised. We planned for the typical needs--kids’ college expenses and life insurance in case something happened to Jim.
Then it happened. I walked into the office one beautiful Spring day, and one of my assistants showed me his obituary. Jim had died at age 48 of a massive heart attack.
My heart sank. I instantly thought of his wife and five kids and gathered the team to say a prayer for them.
Unfortunately, the first time I met Jim’s spouse was at his funeral. Not ideal, to say the least.
A couple of weeks after the funeral, Jim’s spouse, (let’s call her Kayla), came to the office to go over everything. I’ll never forget standing outside of my office watching her walk down the long corridor toward me. She was clearly in mourning and had no recognition of me whatsoever.
Even though Kayla’s finances were in great shape (largely thanks to the insurance we bought), the lack of knowledge she had about her personal finances and the lack of relationship with us made it hard for us to comfort her as fully as we desired.
That was one of the most painful experiences I’ve ever had in this business.
I immediately pledged to hire a new staff member whose primary job was to make sure that never happened again. We did hire that person and we still tell this story consistently so that every new team member at our firm understands the importance of meeting both spouses.
The benefits of including both spouses in meetings are far-reaching. Not only does the less-financially-inclined spouse have a third party to trust, but they also obtain (at least) a high-level understanding of their financial position.
Recently, I was speaking with an estate planning attorney about the importance of this issue and he said, “Not only is this approach a short-term gift to the surviving spouse after a death, but it can have long-term implications, as well. I’ve seen many surviving spouses need psychological counseling for years to understand why their late spouse didn’t care enough about them to include them on such an important issue.”
Do you have a written financial plan? When was the last time you reviewed your entire financial situation with your spouse? Does your spouse have a relationship with an advisor he or she trusts in case something happens to you?
If you answer was “no” to any of these questions, please contact us—we can help. It will be a huge gift to your family.