Fidelity Investments released new insights from its 2013 Couples Retirement Study on the retirement expectations and preparedness of couples who work with financial advisors.
The study uncovered a dynamic between couples and advisors that is not commonly discussed: the role men play in facilitating – even sometimes inadvertently hindering – their partners’ relationships with their advisors.
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Only 42% of couples who work with a financial advisor interacted "jointly" with that advisor, and men were 58% more likely than women to be the primary contact with the advisor.
This imbalance in financial "ownership" may put many women in a difficult position, as data shows most will outlive their significant others, forcing them into the financial driver’s seat.
Jylanne Dunne, senior vice president of practice management and consulting, Fidelity Institutional Wealth Services, said: "Men reported that they are afraid of leaving their partners financially unprepared should they need to manage the finances themselves. What they may not realize is that by driving their households’ relationship with their financial advisors, they could be unintentionally turning this fear into reality. The good news is that there are simple steps couples can take to attempt to align their financial future and prepare for a smooth transition – and advisors can play a critical role in that process."
In fact, the study found that couples were more comfortable talking to their advisors than one another about many topics, including difficult long-term planning conversations such as death and inheritance.
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By GlobalDataTo help advisors initiate the discussion with their couple clients, Fidelity is unveiling the Financial Compatibility Quiz, an online tool that can help couples find their individual — and combined — financial personality.
It can help start the conversation: "Are you the driver or the passenger?" This allows advisors to address their involvement today, transition into playing out specific scenarios and discuss how each partner’s role might change. It may also help advisors strengthen their relationships with both members of the couple.
Brian Nelson, vice president of practice management, National Financial, Fidelity’s clearing division, said: "Women are not unwilling to step into the financial driver’s seat. According to the study, women are interested in working with an advisor, but they say they hand over the reins because they trust their partner. This may not only create instability for the family, but also for the advisor-client relationship. While our study found that 8 in 10 women do not intend to fire their advisor upon their partner’s death, when reality hits and there is no relationship in place, many do. An advisor’s bond with both members of a couple can be key to bridging this gap between intent and reality."
Additional insights from the 2013 Fidelity Investments Couples Retirement Study include:
- Younger women even more likely to hand over the reins: Women were more than twice as likely as men to say their significant other was the primary contact (31% vs. 13% of men). This trend was even more prevalent in younger women, with 41% of Gen Y women reporting their significant other was the primary contact compared to 33% of Gen X women and 28% of Boomer women.
- Trust and relationship with advisor drive the ceding of control: While the majority of women do have an interest in the advisor relationship – only 15% reported they do not have an interest in interacting with their financial advisor – the No. 1 reason they hand over control of the advisor relationship is they trust their partner (53%), followed by 33% of women who said their significant other had a personal relationship with the advisor.
- Fears about lack of preparedness are valid: More than half of women (52%) were confident in their partners’ ability to assume full financial responsibility of retirement finances and strategy. Many men did not share the same level of confidence in their significant others – only 43% of men were confident in their partners’ ability to assume full financial responsibility of retirement finances. This is a valid concern since, according to the study, fewer than half of the women surveyed (45%) were confident in their own ability to assume full financial responsibility.
- Financial advisors can serve as the bridge to help ensure both members of a couple are engaged and prepared: Four in 10 respondents (43%) were more comfortable talking with their advisor than their partner about certain topics, particularly for difficult long-term planning conversations, such as retirement decisions, estate planning and wills. Clients’ comfort in talking with their advisor about these topics suggests a fitting role for advisors – to bring couples together to address these sensitive issues.
Some considerations for advisors to implement in their relationships with couples include:
- Be Frank with Your Current Male Clients. Acknowledge the fear that men have of leaving their partners unprepared should they die. Share the hard truth that this one-on-one relationship could be creating just that situation. Ask them to bring their partners to the next meeting and every meeting thereafter.
- Implement a New Client Policy Requiring Joint Participation. To help maintain the client relationship after the death of a spouse, advisors may want to consider implementing a new client policy that requires married couples to include both spouses in the planning process.
- Address the Tough Topics Together with a Conversation Starter. One way to start to tackle serious planning conversations is with a conversation starter, like the Financial Compatibility Quiz.
