Together forever?

For financial professionals only

Financial plans for couples generally assume that the two parties share common goals. But that is not always the case.

Couples are not discussing their finances. In fact, nearly a quarter (24%) of couples have never discussed their retirement income[1]. In these circumstances, advisers have a job on their hands to get to the bottom of clients’ true intentions. So, what can you do to support your clients in their life plans?

One pot, two perspectives

Men and women view retirement very differently.

For some, it’s a time of existential angst and indecision, when the pressure to ‘do what you have always wanted’ faces off against the looming prospect of incapacity, bereavement and poor health, and the complexities of money.

For others, it’s a time to put family first and foremost, whether parents or adult children or both. And some decide to concentrate on their own, individual, priorities above all.

The importance of aligning these expectations and needs can’t be underestimated. The very point of retirement for each can be the first hurdle in creating a plan that matches expectations for both.

Planning for the worst

Society is changing but today, most wealthier couples over 50 will show an imbalance in wealth. He will typically have more than her. But the likelihood is that she will outlive him – in fact, the most common marital status for women over 80 is widowed[2].

No-one likes to talk about the worst happening, but it’s crucial where the ‘ownership’ of wealth is largely held by just one of the couple. This is an important conversation to have with the pair – they both need to understand the advice to feel comfortable with your services. It’s worth bearing in mind that you’ll likely to be advising her on a longer-term basis, so that relationships wants love and attention.

Nothing breaks like a heart

It might come as a surprise (or not) to financial planners that the average age of divorce is now over 45. Older life divorces are increasingly the norm and obviously a highly emotional time in life. That can lead to bad choices by the client. More than ever, your clarity and guidance is crucial to ensure that tax-efficient splitting of assets can support your client’s longer-term goals on an adjusted pot of money.

Diversity pays

As consumer profiles change, so must financial advice. Broader thinking is needed to engage traditional clients (men) who might be worried about their spouse’s prospects when they are gone. Diverse advice is also needed for the new owners of wealth – women! They live longer, get better divorce settlements than ever, and control the household financial situation more than you might think. Nurturing their needs is the key to tapping into a whole new client base.

[1], 2018

[2] 2018

This article is for financial professionals only. Any information contained within is of a general nature and should not be construed as a form of personal recommendation or financial advice. Nor is the information to be considered an offer or solicitation to deal in any financial instrument or to engage in any investment service or activity. Parmenion accepts no duty of care or liability for loss arising from any person acting, or refraining from acting, as a result of any information contained within this article. All investment carries risk. The value of investments, and the income from them, can go down as well as up and investors may get back less than they put in. Past performance is not a reliable indicator of future returns.  

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