When two successful people marry, it can be as complicated as any business merger. Both partners have accumulated significant assets—from $1 million to $10 million or more. And each has a unique philosophy about saving, spending and sharing the wealth. If you are in that category—or hope to be one day—these four questions can help you clarify your financial future together.
Are you duplicating your efforts?
No doubt each of you is coming into the marriage with your own investment relationships. Therefore, you may have duplicate holdings, duplicate strategies, duplicate effort from portfolio managers—a need to minimize overlap.
You need your assets working for you, not against you. You’re spending good money for those advisory services. Are you getting maximum efficiency for your dollars? Some portfolio managers are more expensive than others. Ask your advisors:
- How are you compensated? (Is it salary plus incentives? If so, how are the incentives paid?)
- How many clients do you serve? (Can your advisor devote the time you need to focus on your account?)
- How often do you plan on meeting with me? (Does the answer live up to your expectations?)
- Are your recommendations sustainable to fund my estate plan?
How will you plan for inheritances?
Your adult children are part of the picture, and your views may change when they themselves marry. You may get a new in-law who isn’t in sync with your family values. Or one of you may have a child who just isn’t careful with money.
Trust planning becomes vital, providing clauses to make sure assets aren’t squandered. Taking steps now can ensure they continue to work as you intended.
What are your attitudes toward debt?
Money—like marriage—is an emotional subject. One spouse may be risk-averse; the other may appreciate debt as a way to leverage investments. Debt can in fact be a useful tool, if you have confidence in the advisor handling liability management. But both partners need to achieve a comfort level with the amount of risk they can tolerate going forward. An experienced, objective third party can guide your discussion through the emotional hurdles and help you find the right balance.
What goals have you and your partner set?
Will you be buying a new home together? Are you concerned about leaving an inheritance for your heirs? Or do you just want to spend your money on each other?
Newlyweds who’ve accumulated assets of any substantial amount often decide to keep separate funds for discretionary income while creating a joint account for regular household expenses.
When you marry, it’s imperative to be on the same wavelength about your funds and your future. That’s why a fresh look at your financial plans is in order.
Have a marriage of the minds about your financial future.
At Webster, we’ve often found that successful clients have focused 100% of their energy on their businesses—not necessarily the capital markets. (Sometimes they may not fully appreciate how wealthy they are until they sell the business. Suddenly, they have an influx of cash bigger than they even imagined—and a serious need to rethink their plans.)
Even the wealthiest people may not have the time or background to stay on top of the day-to-day ups and downs affecting their portfolios, especially in volatile climates. That’s why it’s important to work with advisors who take the time to understand your goals—and have the time to focus on maximizing the strategy for your happily-ever-after.
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