Trust, Husbands and Financial Advisors

A woman called into a talk show where the topic was marital fidelity.Saying she was done with men, the caller ended her commentary by asking "If you can't trust the person who takes a marriage vow with you, whom can you trust?"

I thought about her question as it applies to two professions dealing with money- financial advice and accounting. No financial advisor takes a vow before taking us on as a client. We can't check a track record because the names of clients are confidential. We have no way of knowing how well the advisor does in an economic downturn.

Bottom line, we're working on trust - giving our money to a firm or individual whose caveat is that past performance is no indication of future results and counsels us on the risks of investment. The certificates on the office wall testify to completion of a course of study, not a grade for performance.

The same holds true for the accounting profession. Most accountants are good at what they do. But they depend on accurate input from us to help us with our tax return. The accountant signs the return based on trust that we've provided all the information we're required to provide. If we're filing a joint tax return and most of the financial information is handled by our husband because we don't "do taxes", we have to trust he has provided accurate information.

Trust is involved in a transaction with someone when we do not have full knowledge about them, their intent, and the things they are offering us. However, when it comes to marriage, which requires no study, no training and nothing but a vow, trust is used interchangeably with love. Unfortunately, love is not a course of study and no one gets a diploma in the subject.

Bag Lady Fears: Rational and Persistent

Men, whether successful or not, don’t seem to worry about becoming destitute in their old age, invisible, unloved, roaming the streets, scrounging in garbage cans for food. But irrational as it may seem, successful women also suffer from bag lady fears.

Katie Couric, Gloria Steinem and Lily Tomlin admit to sharing this fear of becoming a bag lady. So did 48 percent of the 1,938 high earning women polled by Allianz Life Insurance in a 2006 poll. A stunning 90 percent of these high earners admitted to feeling financially insecure.

Many married women don’t have a history of understanding or managing money. They're not used to seeing the bigger picture. They think their husband is better at making the ‘really big’ money decisions. While they balance the household budget and decide what to buy, he handles the investments. If the marriage ends, they don't understand what he was doing financially. Often they find themselves responsible for financial decisions he made without their knowledge or participation.

The bottom line? Wives' financial decisions revolve around money spent and gone, not invested for growth.

Bag lady fears may be emotionally irrational for financially secure Katie, Gloria and Lily. Their fears relate to being out of control, of feeling weak and fearful that they can't make it on their own. For them, these are childhood tapes and no longer based on reality.

But for millions of women, divorce or widowhood is the wake-up call that they have to start thinking differently about money. Four in 10 marriages end before the 30th wedding anniversary. Only 16% of married women have a financial “Plan B” in case of divorce. The average age a woman is widowed is 56. Her average longevity is 84.

Every woman who isn't in charge of her financial life is at risk of being a bag lady if someone is planning her future. That makes the bag lady syndrome a rational fear which requires paying attention to now.

Financial Intimacy: The Business of Marriage

If you have a business partner, you expect to share information about your business. However, most of us don’t think of our marriage as a business although it has an eerily similar structure minus, of course, the love, romance and illusion of living happily ever after.

Consider that a business has income, expenses, assets, liabilities, taxes and net worth.So does a marriage. That’s why marriages need financial intimacy.We don’t start a business or go into marriage expecting that it might fail. But both fail at alarmingly high rates, albeit for different reasons.

It’s counterintuitive to think about widowhood or divorce when you’re getting married. Few women do. But I’ve written over the years that letting one partner manage all the money sets the other partner up for financial vulnerability. Too often, the partner with her head in the sand is the woman.

Being in love often makes rational thinking difficult and we trusting creatures make certain romantic assumptions. For example, we assume our mate is making financial choices that will benefit us both. Sometimes he is; sometimes he isn’t. Sometimes he assumes we don’t want to be involved. Other times, he doesn’t want us to be involved.

Here’s the bottom line: In the nine community property states (http://tinyurl.com/3rtr5j4),husband and wife share responsibility for financial decisions.

Do I understand what my partner is doing financially?

Do we regularly discuss our finances together?
How would I manage if I were widowed or divorced?

Do I sign documents without understanding them?

Do I know the location of all our financial records?

These five questions will give you a head start on practicing financially safe marriage.

Financial Intimacy: Five Points about Marriage

You romantics out there may not be happy with this blog. You may consider it in your face, the ranting of a realist , a cynic or worse, a misandrist . I apologize for shattering your illusions.

Before You Sign the Tax Return

Filling out your tax return is like looking at your complexion in a magnifying mirror. You get to see things that are not obvious unless you're taking a closer look.

Divorce Isn't Always Personal

It started three years ago when Inge told her husband she planned a face lift and he told her they couldn’t afford it. She thought they could. She asked Harry to show her the books.   He got angry, called her a shrew, a nag, and an ungrateful bitch of a wife, then stormed out of the room, slamming the door behind him.

I met Inge when she attended my seminar a few weeks after that incident. Recently, I saw her again on the walking trail. Animated and radiant, she looked years younger than I remembered her. She brought me up to date.

“After your seminar, I realized I had a legal right to know all about our marital finances,” she said. “At dinner that night, I told Harry that I wanted to participate and understand our marital finances. He gave me the same old stuff, told me not to worry, not to nag, just to trust him, blah, blah, blah.

“For the first time, I really lost it. I told Harry that since he wouldn’t share information, I was going to get it some other way. He didn’t believe me. He called me crazy, menopausal, said I needed a shrink. I threatened divorce, figuring that was the only way I was going to learn anything about our finances. Harry warned me that I didn’t have any money to pay for a lawyer.

“I searched until I found a lawyer who was willing to delay payment until after the divorce. He got a forensic accountant who dug back two decades for information about Harry’s business and investments, most of which I knew nothing about. By the time the accountant was done, Harry was pleading with me not to go through with the divorce. I told him it was nothing personal, but at that point, I wasn’t going back.”

Inge’s eyes sparkled as she continued.

“The divorce was final a year ago. For the first time in my life, I had money of my own. After paying the lawyer, the first thing I did was have that face lift.  I’ve also signed up for some business and investing classes.”

“ How is Harry doing with all this?” I asked.

“Well, I was mad at him, but still loved him. He’s a great-looking sexy man, we have the three children and we had a good life,” Inge said. “I just didn’t like how he lorded it over me about money. After the face lift, Harry kept telling me how beautiful I am, just like the girl he married, that he could never love another woman and would I consider getting together with him again. I said I’d consider it, but not without a prenup.”

Update? They remarried, with a prenup.