Why the concern and is it reasonable?
Some are concerned about having to protect the wealth from what may seem to their spouse like “reasonable” spending. Some worry that their ability to take risks with the wealth will be curtailed. Others would rather avoid the ceaseless questions about how the portfolio is doing, or having to say “no” to “Keeping up with the Joneses,” while some fear that unmonitored spending may result from the thinking that there is more than sufficient funds to cover lifestyle choices.
Transparency is a two-way street We suggest it’s the responsibility of the income producer to prepare the beneficiaries—spouse, children and even grandchildren, and it’s the responsibility of the beneficiaries to choose to be prepared and to be accountable.
How does the income earner know how to assess another’s readiness? First step is to thoughtfully choose the context for revealing the information. The context is actually more important than the information itself. Revealing the purpose of sharing the financial landscape sets the stage for possible actions. For example, to say “I’d like to have a conversation with you about our net worth so that we can be partners in continuing to build it” sets a tone that the purpose of the wealth is not to spend it. It’s clearly a conversation about how the wealth is to be used to accomplish a goal.
How beneficiaries choose to be prepared and to be accountable:
Engage in actions that are in alignment with the purpose of knowing the financial picture
Formulate and ask questions that demonstrate an interest in knowing how to contribute to the stated purpose for the wealth
Listen and view the family’s assets as something they can impact positively as opposed to the wealth impacting them
No one likes secrets, especially spouses When we suspect our spouse is keeping something from us, our curiosity is aroused. It’s a lot like telling willful children not to do something, and the next thing they do is exactly that. Over time, a pattern of evasiveness is construed as control and distrust. The conversations become a practiced game of cat and mouse resulting in a mood of anger, resentment, resignation and sadness. Sadness because the spouse begins to realize you trust your advisors more than you trust them.
The information, or the numbers behind the conversation, are not the issue. What is important is to stay focused on the actions you would like to see happen as a result of the information. Those actions might be building a stronger “family” team or aligning your vision for the wealth. The goal may be to build a stronger commitment to the impact you would like to see the wealth have in the world, or perhaps it’s simply to know your disclosure will serve both of you if something unexpected should happen.
Our experience indicates it’s essential to first set the context. Ask yourself - for the sake of what do I want to hold this conversation? Invite your spouse to share what they would like to know, and, if they knew that, what would be possible? And how often do they want to be updated?
After you have set the intention for the conversation consider having a qualified third party such as your financial advisor, discuss the details of the asset portfolio as part of an educational conversation with both of you.
You don’t need to go it alone. Conversations about money are never easy. Call us if you want to talk about how to start the conversation in your family.