Michigan, US (BBN) – For couples planning to get married, a meeting with a financial professional is an increasingly important step along the way, advisers say.
It’s a “function of the fact that people are accumulating assets before marriage, getting married later in life, and seeing more and more people getting divorced,” says Lawrence D. Mandelker, a trusts and estates attorney with Seyfarth Shaw LLP in New York who has been referring more clients to financial advisers for these services, reports The Wall Street Journal.
Financial professionals who offer premarital financial planning say they work with couples beyond the nitty-gritty details, such as who is going to pay the bills and whether the couple will pool their money or keep their accounts separate.
They’re taking on a counseling role to help couples deal with the emotions that can complicate financial decisions—for instance, the stress that can strain a relationship when one partner tries to exercise too much monetary control.
“We’re more psychologists in this position than we are financial planners,” says Matthew Celenza, managing partner at Boulevard Family Wealth, an investment advisory firm in Beverly Hills, Calif., who has helped couples with premarital financial planning.
“It’s the root of so many problems in couples’ relationships,” says Jeremy S. Office, founder of Maclendon Wealth Management in Delray Beach, Fla., who regularly counsels clients on premarital financial issues.
Some professionals bill an hourly rate for these services, while others don’t charge separately for the premarital financial planning they do for existing clients or children of clients.
Some don’t charge prospective clients, while others base their fees on the complexity of the situation. Couples generally meet with their advisers anywhere from one to five times, though it depends largely on what the issues are.
For the process to work, couples should be willing to openly discuss their spending habits, assets, liabilities and financial goals, says Laurie Boore-Clor, a 37-year-old doctor in Ann Arbor, Mich., who went through premarital financial counseling with her fiancé, now husband, about two years ago.
“If you have secrets in a marriage, that doesn’t help your marriage,” she says. “If you’re willing to hide your money, what else are you hiding?”
Only when people are open about how they feel can inevitable differences be addressed. About a year ago, Renée Kwok, a certified financial planner and president of TFC Financial Management Inc. in Boston, worked with a young couple who planned to buy a house but had very different views on how much to spend.
The future bride was much more frugal than her fiancé, and it was an emotional sticking point, says Ms. Kwok. She talked the couple through different scenarios and ran financial projections. She asked the young man to consider how spending less would be more prudent and how it would help to ease his fiancée’s anxiety.
The couple ultimately decided to take a more-conservative approach based on the future bride’s concerns, Ms. Kwok says. These meetings are “a forum for creating compromise because you see [people’s] emotional reactions,” she says.
Tiffany Welka, vice president of VFG Associates, a registered investment adviser in Livonia, Mich., is part of the premarital counseling board at her church. Couples who want to get married at the church are required to meet with various social-services professionals, and they go to her for financial counseling. She doesn’t charge for these services.
Ms. Welka says she helps engaged couples create a budget, determine common financial goals and set a financial plan. She also encourages them to communicate about financial issues. On average, roughly three of the five young couples she counsels each week on premarital financial planning issues haven’t talked about their finances previously, Ms. Welka says.
They have no idea how much the other person spends or how much credit-card debt he or she is carrying—and they are surprised when the information comes out during discussions.
Derek Gauci, age 28, says the premarital financial-planning process got him and his now-wife, Lauren, also 28, started on the right financial footing. Before going through the process, the couple, who live in Plymouth, Mich., hadn’t given saving for retirement or life insurance a second thought, he says. Also, Mr. Gauci had been putting all his money into his wedding-photography business and didn’t know how much of a profit he was making, how to calculate monthly costs or how to budget appropriately. He feels premarital financial planning is so important that he has encouraged several employees to do it. “I think you’d be a fool not to,” he says. “You just don’t want to have any big financial surprises.”
LIKE A BUSINESS DEAL
In some cases, premarital financial planning with older couples ends up being much like a “business negotiation”—trying to determine who is paying for what and how much, says Mela Garber, a tax principal at New York-based accounting firm Anchin, Block & Anchin and chairwoman of the firm’s trust and estates services group.
Ms. Garber has worked with several older couples where one person makes significantly more money than the other. During the dating phase, the wealthier person often covers the tab for dinners and vacations, but he or she may expect the partner to chip in more substantially after the marriage. If those expectations aren’t discussed up front, problems can arise. “Misunderstandings happen when people assume things that aren’t reality,” Ms. Garber says.
To be sure, not everyone needs a professional’s help with premarital financial planning. Several years ago, Saramaya Penacho, a publicist in San Diego, and her then-fiancé, management consultant Zach Penacho, instituted an annual financial-planning retreat where they go away for a weekend and discuss their past year’s finances and set a road map for the year ahead. At last year’s getaway, they discussed things like how much they could afford for a down payment on a home and brainstormed ways to trim expenses.
It has been an effective way for the couple to gain a shared understanding of their individual and mutual financial goals and save for their future, Ms. Penacho says.