You don’t need to watch Mad Men to understand how far socially women have progressed in the past few decades. But despite that progress, some women still damage their long-term financial prospects by making serious money mistakes when they marry.

The consensus among financial advisors is that a lack of communication underlies most money problems in relationships.

“Women don’t talk enough about money with their partners,” says Cathie Hurlburt, senior financial planning advisor with Assante Financial Management Ltd.in Vancouver. “They’re uncomfortable with the subject, so they don’t discuss who will manage the money, how they’ll share expenses and debts, or how they will make major financial decisions.”

Part of the problem, she says, is that many people are getting married later in life, by which time they often have ingrained financial habits. As a result, they’re inclined to keep the status quo and don’t think about how their money should work jointly.

“They may have very different financial expectations and money styles without realizing it, which often leads to conflict,” Hurlburt says. “And they may not understand one another’s financial situations when they marry.”

Bryson Milley, a financial advisor and associate portfolio manager with Rogers Group Financial Advisors Ltd. in Vancouver, works with couples who are planning to be married. Part of Milley’s program involves complete disclosure of assets and debts by both partners. “There cannot be any secrets with money,” he says.

You can help your client couples come to terms with different financial styles — such as spender vs saver — and find common ground, says Sucheta Rajagopal, an advi-sor with Toronto-based Hampton Securities Ltd.: “There are no ‘rights’ or ‘wrongs.’ But [couples] need to reach an understanding about how they’ll work together to achieve their financial goals.”

ON THE SIDELINES

Although younger women tend to be more involved in family finances than their mothers were, Rajagopal says, some still make the mistake of staying on the financial sidelines.

“Women sometimes lack confidence and don’t trust their instincts,” she says. “They’re embarrassed by their lack of financial knowledge and think that everyone else knows better than they do. They need to ask questions, work with an advisor and learn to make smart decisions.”

Some people are naturally better than others at handling money, and it makes sense for the partner with the greater interest and aptitude to manage things, adds Rajagopal. But even if a woman doesn’t look after the money on a daily basis, it’s essential that she understand how the household finances work.

“Both partners should know what comes in and what goes out on a monthly basis,” says Rajagopal. “They should also know where all the bank accounts are held and have access to a list of people, such as financial advisors, insurance agents and accountants to contact in the event of a crisis, such as a serious illness or death.”
@page_break@Ignorance is anything but bliss when it comes to finances, says Tracy Piercy, founder and CEO of Moneyminding International Inc. , a Victoria-based financial literacy company that trains advi-sors and their clients. In some cases, she says, women abdicate control of the finances while retaining a veto over important financial decisions: “Some women don’t want to talk about money issues or learn how financial markets and vehicles work. Yet they still make the ultimate decision about where the money will be spent or invested.”

Such decisions are inevitably poorly informed, says Piercy: “The same fear that keeps these women from learning about money will keep them from taking advantage of opportunities and strategies that could provide good results.”

A failure to do proper financial planning in advance of marriage is one of the biggest mistakes Rajagopal sees women making. “They spend a lot of time working with a wedding planner,” she says, “when they’d be better off seeing a financial advisor who can help them create a plan for the future.”

ONGOING PROCESS

The second part of the problem is that some women create a financial plan and never look at it again. “They view planning as a task, when it’s actually an ongoing process,” says Rajagopal. “A financial plan should be reviewed on an annual basis or whenever a major life event, such as marriage, the birth of a child or a death in the family, occurs.”

Such events are the perfect opportunity for you to ask your client: “How does this affect the plan, and how does it affect your goals, dreams and priorities?”

Failing to keep track of premarital assets can be a very costly error, according to Debbie Hartzman, an advisor with Professional Invest-ments (Kingston) Inc.in Kingston, Ont.: “Because there’s a trend to later marriage, people tend to build up more personal assets while they’re single. Some women lose track of what they brought to the marriage and comingle their assets — using them, for instance, to help purchase a family home. If they don’t keep track of them and the marriage fails, they could lose a lot in the divorce settlement.”

To avoid that problem, Hartzman recommends that anyone who brings assets to a relationship have a written prenuptial agreement.

As for day-to-day finances, there are mixed views on the subject of joint bank accounts. Hartzman is a strong proponent of joint accounts: “Marriage should be a joint venture, and a joint account signals that it is an equal relationship.”

Hurlburt, on the other hand, says a woman should establish herself as an independent financial entity, so she can obtain credit if the marriage fails.

Milley suggests two possible systems. The first is to use three bank accounts: a joint account, through which all income and family expenses run; and two personal accounts, which hold spending money for which the partners do not have to account to one another.

The second possibility is to use a single joint account. Everything goes in and out of this account.

“Find a solution that works well for the couple,” Milley advises, “and run with it.” IE