Retirement For Life

Financial Blind Spots in Marriage: Don’t Let This Happen to You - Ep 43

• Christian Cyr, CPA, CFP® • Season 2 • Episode 43

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Financial transparency between spouses is critical for retirement planning and can prevent disaster when one partner passes away. We discuss real-life examples of what happens when couples don't share financial responsibility and knowledge.

• Both spouses must be involved in financial planning regardless of interest level
• Requiring both partners to attend planning meetings ensures everyone understands the plan
• When one spouse dies, the surviving spouse often needs significant support for about a year
• Separate finances make comprehensive planning nearly impossible 
• Different risk tolerances between spouses require compromise, not separate strategies
• Women statistically outlive men and need to be prepared to manage finances independently
• Financial disagreements are a leading cause of divorce, even after decades of marriage
• An advisor should make complex concepts understandable for both spouses
• Both spouses should know where to find important documents and account information

Take time this month to have honest financial conversations with your spouse and ensure you're both prepared for whatever the future holds.

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Intro:

Retirement for Life, your passport to a comfortable and confident retirement. The podcast that's equal parts education and entertainment, where we break down the retirement maze with a dash of fun and a heap of wisdom from your host, Christian Sear, CPA, the passionate retirement specialist and president of Sear Financial Wealth Advisors. The independent registered investment advisor specializing in the AIM retirement system.

Christian Cyr, CPA, CFP®: :

All right. Today's topic is extremely important, especially for women. I'm watching a show on Netflix the other night and I thought we need to do a podcast episode on this. Brooke, you have seen the episode? Yeah, Emma, you have seen it.

Emma Bean, CFA®:

Yes.

Christian Cyr, CPA, CFP®: :

Andrea has not. So we're not going to give away the name of the show. We're not going to give away that because it's a great show, but at the end of the show this is a true story, Actual husband, actual wife the couple has lost. How many homes have they lost?

Emma Bean, CFA®:

Four homes in the last year.

Christian Cyr, CPA, CFP®: :

Lost four homes right Due to primarily financial reasons, and at the end of the show the husband finds out that the wife has lost several jobs and has not been working for over a year, and the husband's like you didn't have a job.

Emma Bean, CFA®:

Yeah.

Christian Cyr, CPA, CFP®: :

That's why you lost four homes. Okay.

Emma Bean, CFA®:

And on top of that she was in charge of the finances.

Christian Cyr, CPA, CFP®: :

She was in charge of the finances. So today we're going to be talking to two different spouses. Okay, and this is again very important, if you're a woman but also a man, Spouse number one never pays attention to the finances, doesn't know what the finances are, despises the finances. Doesn't know what the finances are, despises the finances. Doesn't want to even be in the meeting about finances. The other spouse we are talking to today is the guy or gal. There's a lot of women that are in the same position, that are like I know everything about my plan, I'm in control of this, I know I balance my checkbook, I know everything to a penny. Both of these situations are bad, so today we're going to talk about this. Andrea.

Andrea Brannon, CFA®-IF:

Yes, do you remember when we used to have seminars? Yep.

Christian Cyr, CPA, CFP®: :

What did I make everyone at a seminar wear? Everyone had to have a person's attention. If you say their name, If you just say hey, you and this is the stereotypical couple that would show up to a seminar I'm going to say Jim with his name tag on and. Mary. Mary would be there listening to every word. I would say what's the next thing? What's that graphic say she's writing notes. She's like this Jim, kind of like looking around looking at his phone. I go Jim, I pick on Jim.

Christian Cyr, CPA, CFP®: :

I'd say, jim, you tell me whose idea was it to come here tonight? And of course, the answer is it was Mary's idea. This is a situation that we have to avoid. Let's talk about that.

Andrea Brannon, CFA®-IF:

This is a situation that we have to avoid.

Christian Cyr, CPA, CFP®: :

Let's talk about that, go ahead. What do we have to say about this situation?

Andrea Brannon, CFA®-IF:

I mean you often say in meetings that I realize coming here is like going to the dentist. You don't really want to be here.

Christian Cyr, CPA, CFP®: :

Some people don't want to be talking about their finances.

Andrea Brannon, CFA®-IF:

But we really need to have both spouses there. We realize it's not necessarily what they both want to do, but it's going to come to a point where one of them is going to pass away and the other one really needs to know what's going on.

Christian Cyr, CPA, CFP®: :

Yeah, you have that customer that you love so much. She was the one driving the discussion about finances, right yeah?

Andrea Brannon, CFA®-IF:

Yeah, had a couple of visits with just her and we asked her if she'd bring her husband and he came and he was not necessarily wanting to be there at first, but by the end of it he admitted that he needed it and it was really helpful.

Christian Cyr, CPA, CFP®: :

Every situation that we have, especially at first. You know we'll have a first meeting with just the husband or just the wife, but at that second meeting, or just the wife, but at that second meeting, it's a dead giveaway for me that I don't wanna work with this person. If he or she is not willing to include their spouse in the meeting, I don't care if their spouse doesn't want to be in the meeting. You remember the other day we had I said where is your wife? And he goes well, she's over here.

Emma Bean, CFA®:

Yeah, well, bring her in.

Christian Cyr, CPA, CFP®: :

We want to talk Bring her in, right, bring her in. And she was right there. I was like no, I want you to be there. It's important, important to me because, ultimately, here's an example. This is one of our clients. This is an example of what really happens and why you need to understand that this is important for both people. Brooke, roll that clip.

Announcement:

My situation was that my husband died a year and a half ago. My situation was that my husband died a year and a half ago and he had always taken care of all the money and he was really good at it. We didn't have anyone else. He watched the markets and did the thing and at the end of the month, took all the numbers and did all of that. And he knew that, when he wasn't here anymore, that I wasn't going to be able to do that and I didn't want to do that and he had fixed it so that someone else was going to take over. But I didn't really like these people. I mean, they were nice people, but they were too business for me. They were too business for me. They were too far away, Okay, and I needed handheld. My hand to be held and I knew I wasn't going to get it there. So after he passed, I said I have to change this.

Emma Bean, CFA®:

Like we were talking about. We have a lot of clients starting out, you know, not knowing one thing, but, like we just saw with the clip, sometimes it can be too late and even if the spouse thinks they've set up, you know the other one for success. Sometimes it's just not explained and the advisor doesn't walk the client through things easy. You need somebody to work with you both while you're both alive and then make it easy when one of you is gone.

Andrea Brannon, CFA®-IF:

also, Right, because you both need to be comfortable. So it doesn't help if you know the one spouse is comfortable and wants to work with us and then you know he passes away or she passes away and the one left doesn't really want to work with us or someone else in that situation.

Christian Cyr, CPA, CFP®: :

You know.

Andrea Brannon, CFA®-IF:

You need to be comfortable and know what's going on.

Christian Cyr, CPA, CFP®: :

So, andrea, tell the audience about our best real life story we have, about why this is so important. And that was only a couple of two or three years ago.

Andrea Brannon, CFA®-IF:

Yeah, a few years ago we had a younger couple and the husband was sick and he had been the one that handled everything and she was not really in the loop and he knew that she was going to need someone to get her through when he passed away. So we met with them and we really enjoyed both of them and, you know, when he did pass, she definitely leaned on us for support.

Christian Cyr, CPA, CFP®: :

She really leaned on us.

Andrea Brannon, CFA®-IF:

Yeah, and you know we had to make a lot of phone calls and things that she, you know, wasn't comfortable doing on her own to make a lot of phone calls and things that she wasn't comfortable doing on her own.

Christian Cyr, CPA, CFP®: :

So how many months do you think after the husband passed away did we have to give special attention?

Andrea Brannon, CFA®-IF:

getting her through all the documents. In that situation it took us about a year or so just because there was a couple different pensions and just getting the paperwork and stuff. It's not always that long, but there's always a process.

Christian Cyr, CPA, CFP®: :

And I guess she was in a good position where she was with the financial advisor us that knew everything in their life, so at least we could help them with that. But imagine if she didn't have that person. It took her a year with a financial advisor who knew everything in their life. How about, emma, these clients You're always doing financial planning? How about these clients that don't want to share information or work together? What's that like?

Emma Bean, CFA®:

Yeah, it's one thing when two people come in and maybe they're on different pages, but it's a totally different thing when you have one client who's married, who is on a completely different page and they keep their finances 100% separate from their spouse. And think about how hard that is what they're asking us to do. They're asking us to come up with a plan, they're filing taxes jointly, asking us to show them what a Roth conversion looks like, and we don't even have 50% of the details of that plan. It's impossible to even begin to put together a tax strategy for them.

Christian Cyr, CPA, CFP®: :

Help me save six or seven figures on this very important strategy, but do it without knowing all the facts. I can't tell you how much money my wife has. I can't tell you what her bank account balance is. I can't even show you her tax return.

Andrea Brannon, CFA®-IF:

Yeah.

Christian Cyr, CPA, CFP®: :

Don't ask me to give you an answer without giving me all the facts first right.

Emma Bean, CFA®:

Right.

Christian Cyr, CPA, CFP®: :

There's a lot of differences too, and I think I just saw this. Last week I had a poor client. She came in, she's in her mid to late 50s and after 30 years of marriage she's getting divorced. There's tears, we're talking through it. Why are they getting divorced? Because they have different values of money. They value work ethic differently. One spouse values saving, working hard, the other spouse values other things in life, and this can cause controversy. And I'll tell you another thing Not being able to trust the other spouse with money is crucial. I have a dear friend and this was decades ago, before I even was a financial advisor. He comes to me and he says you're never going to believe what happened to me. You know what?

Christian Cyr, CPA, CFP®: :

My wife, which is now his ex-wife- mm-hmm she went to the financial advisor, walks into the office, makes up some sob story which was completely false, not true. She walks into the financial advisor's office and she says I need to empty my husband's retirement account. Now, first of all, if somebody comes to you and says, empty my husband's retirement account, what do we say?

Andrea Brannon, CFA®-IF:

Well, number one we need to know if there's a financial power of attorney. Number two nine times out of 10, the answer is going to be it's not your account.

Christian Cyr, CPA, CFP®: :

Right. Well, this advisor who's no longer in business, by the way just went ahead and emptied out my friend's retirement account, gave it to the wife, she spent it, she loaned it out to her family, gone Guess what. She's gone About five years later. Same friend, my friend, same wife, now ex-wife same financial advisor. It happened two times to this person. You know that's an example of there's no trust between the two spouses, yeah.

Christian Cyr, CPA, CFP®: :

So what about when we have I love this in one chair? We got dad who's like Ricky Bobby, wants to get around Daytona 500 as fast as possible, and we got mom who wants to wear a seatbelt when she drives 50 feet across the street.

Emma Bean, CFA®:

What's that like in financial? I think of many real-life clients that we have where this is the case.

Christian Cyr, CPA, CFP®: :

Oh, gosh, gosh.

Emma Bean, CFA®:

You know the wife wants to be in 100% CDs and the man wants us to be in 100% stocks. You know options, whatever it may be, and that just doesn't work. Not only are we talking about two completely different you know investment strategies, but they're clearly not on the same page when it comes to what their financial plan is. There's only so much. Only so much. Putting that together. There's no 50% CDs, 50% option strategy. You have to have a little bit of communication and get on the same page before we can help you out.

Christian Cyr, CPA, CFP®: :

That's why when we ask people questions, we'll ask mom the question or dad the question, and a lot of times I use this trick, like I'll have them write down the answer. You know I like to do that to you guys.

Christian Cyr, CPA, CFP®: :

So don't answer out loud, mom and dad, but I want you to give me this, this answer, and write it down. And it's great when you do that with husband and wife. Is the answer the same? Is it different? How about Andrea? I'm talking about a client. They cannot agree in retirement on where they want to live. Does that cause problems?

Andrea Brannon, CFA®-IF:

Definitely. Yeah, I mean, you have one that you know and usually I would save. In my case especially, I want to be where my kids or grandkids are at, and maybe the husband just wants to be somewhere warm, so he's in Arizona and she's in Illinois. That doesn't work.

Christian Cyr, CPA, CFP®: :

It's tough. So I think, when you're listening to a show like this, on a topic like this, I think what you want to ask yourself if you do have a spouse, who am I? Am I spouse number one, who's in control of everything? If that's you, how much does your wife know right now, brooke, let me ask you a question. If something would happen to you, what's going to happen in your life?

Andrea Brannon, CFA®-IF:

Yeah, actually that's always the joke between my husband and I. I always say if I was to die tomorrow, he would maybe have a month left in our house. Before the lights were turned off, the water was turned off.

Christian Cyr, CPA, CFP®: :

And I think you might say the same thing about your husband.

Andrea Brannon, CFA®-IF:

I have said that. I've said you know my husband's my emergency contact, but he's going to tell you to call me.

Christian Cyr, CPA, CFP®: :

Now, of course, emma has the perfect marriage, so like these two are in the same wavelength, but you're a newlywed, so you haven't gotten to that stage yet.

Emma Bean, CFA®:

That's what you get when you put a CPA and a CFA together.

Andrea Brannon, CFA®-IF:

There you go, that's true.

Christian Cyr, CPA, CFP®: :

But if you are seriously, you're that spouse. That and good for you for being that spouse that knows the information.

Christian Cyr, CPA, CFP®: :

They're probably the one watching this video, right? If that's, you ask yourself the question if something happens to me tomorrow, does my spouse know where the estate documents are? Does that person know exactly what that person needs to know? If I am gone Because we have seen it firsthand more times than not the spouse number one that I'm talking to right now you and I'm looking at you have not done a good enough job talking to your spouse about the things that are important.

Christian Cyr, CPA, CFP®: :

What if you were spouse number three? What if you're watching this podcast and you're like I don't even know how much money is in our accounts. My spouse takes care of that. You are in an even worse position. You owe it to yourself to understand what's going on in your financial life. We've seen it too often. We're helping spouses. They're clueless. They need to know. Remember this women, you are going to be around most likely longer than your husband. Please, please. You owe it to yourself to be on the same page with your spouse about everything and no matter who dies first. It's good to be on the same page. It's good to have an agreement about how you're going to invest your money. It's good to have an agreement as where are you going to live in your retirement. I used to make up things like Brooke. You remember when I used to say it's like Women's Financial Retirement Month? Yeah, what did I do that one time? I made up something.

Andrea Brannon, CFA®-IF:

Well, we did a state planning month in May.

Christian Cyr, CPA, CFP®: :

It was a state planning month in May. I just wanted to say that in the podcast, but it really wasn't a state planning month. I don't know if this is Women's Financial Planning Month Probably it's not but let's just say it is. Every month should be Women's Financial Planning Month.

Emma Bean, CFA®:

Yeah, and you know, the easiest way to set you and your spouse up, no matter which spouse you are, is having an advisor that makes it easy Whether one of you is, you know, left or both of you are around, having an advisor that easily can show you step-by-step what the plan is and what the plan is if one of you is gone, it's on you know them to help walk you through what that plan is and help you with that process.

Christian Cyr, CPA, CFP®: :

I want to tell you why one of the biggest reasons, I believe, that we have found success and growth at this firm over the last 20 years Specifically, I spend more time looking at the spouse who has less comfort with finances.

Christian Cyr, CPA, CFP®: :

I spend more time explaining things in a way that that spouse who's not comfortable with finances can understand, and I go out of my way, when I'm talking to that spouse who A doesn't understand or B doesn't want to be there, to make them feel comfortable, right, at the very least, having a team that you feel comfortable with, even if you don't want to be in that meeting, even if it is like going to the dentist, and that's what the AIM retirement system was built around. So, yes, find the team that makes you feel comfortable and even in the worst case, if you have to go to the dentist, you might as well have a dentist that explains things to you and you feel comfortable with. All right, did we do a good job, brooke, today? Yeah, actually yeah, and you know the last podcast was 30 minutes long, my fault. I could talk about you. Want to talk about France real fast.

Christian Cyr, CPA, CFP®: :

I don't think we need to get into it. I've got a lot to say about France right now, but I won't. You know, in the interest of time, we'll cut it off. But if you want to talk about it, all right. That's all for this week's podcast, retirement for Life. Go ahead, go out there. Educate yourself If you're spouse number one. Educate your spouse If you're spouse number three. Make sure that you're learning everything you need to know. We'll see you guys next time on Retirement for Life podcast.

Outro:

Investment advisory services provided by Seer Financial Inc. Sec registered investment advisor. All content on this podcast is for information purposes only and should not be considered investment, legal or tax advice. Material presented is believed to be from reliable sources and no representations are made by our firm as to another party's informational accuracy or completeness.

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Christian J. Cyr, CPA, CFP®

Host
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Andrea Brannon

Co-host
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Emma Bean, CFA

Co-host