An advisor may find it difficult to get a couple to invest more even though one of them is a saver, the other one is a spender. In this fairly-commonly recurring situation, the correct approach is to meet both the spouses and understand who out of both is the spender and saver.
Of course, if both your clients happen to be two savers, your task will be easier. There should be plenty of money to work with.
For the vast majority, the saver/spender couples, your first challenge will be to find out which partner is which. Never assume that the woman is the spender, and similarly don’t jump to the assumption that the man handles the family finances.
Here are a few suggestions that can help you in advising both the spouses:
1. Take time to listen to fears as well as goals of both clients.
A money personality is a combination of genetics and life experiences. Experience also plays a big and early role in developing money attitudes. Therefore, the IFA should try to understand the fears that have come because of their previous experiences and give them a solution to reach their goal safely.
An advisor to a couple must be respectful of those fears and make both parties feel their needs are going to be met. Think of it as being a relationship counselor as well as a financial advisor.
2. Recognize that people learn differently.
You really want your clients to understand your proposed strategies. While one may “get it” instantly, the other may require a more detailed explanation. Some like numbers, while others react better to graphics. Make your presentations visual and sequential. After all, financial planning is about the present, and the future. Some clients can jump immediately to the end-goal, while others need to see the process step-by-step.
3. Consider the practicalities of time and place.
It is essential that an advisor finds a suitable time where he or she can approach both the husband and the wife. It could be after the work hours at house or in a coffee shop on an off day, which will help them focus on the investing decisions.
4. Craft solutions through compromise.
One can use financial tools to balance the hopes and fears of a couple with different risk tolerances. For example, balance the risk-return considerations to allay fears of losses in equity funds. As an advisor, you know the optimum blend of investments using an asset allocation formula. But your clients need your help in blending their emotions with your suggestions.
5. Think long term.
As a financial advisor you may have to deal with the survivor or their children, therefore both the spouses needs to be included in the process. IFAs always think long-term when it comes to investments, diversification, and the structure of a financial plan. It’s important to extend that perspective to your relationship with each of the partners, helping them face the future with confidence.
