Why talking about investing is good for your marriage
Garry Marr – 13/07/27- Financial Post
Forget about arguments over politics or religion, try dating when you have a different investment philosophy.
Stocks, bonds and mutual funds are not exactly first-date conversation material but maybe they should be. A survay by Bank of Montreal this month found 98% of married couples think they should be on same page as their spouse on financial matters yet 43% claim they have a different investing style.
“You can have one part of the couple that has a much more aggressive investment style and then you might have another part of the couple that is very conservative,” says Caroline Dabu, vice-president and head, BMO Wealth Planning Group.
Ms. Dabu says what happens with many couples is that one person takes the lead on investments. “That can cause issues if you don’t agree,” she says.
Usually, the spark that sets off a major argument is when one spouse gets really aggressive investing with the couple’s money and there is a major loss.
People avoid talking about money because it is a topic that has the potential to lead to very uncomfortable places
The best advice the bank can offer is that people have discussions on financial matters before they get too deep into a relationship. But the BMO survey found less than half of engaged couples surveyed agree they’ve had a detailed conversation about finances.
“People avoid talking about money because it is a topic that has the potential to lead to very uncomfortable places,” said Ms. Dabu.
If you do have that conversation and find one person just wants to invest in guaranteed income certificate while the other is looking for high risk, high yield stocks, how do you get around that divide?
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People get married all the time thinking they can change someone, but the reality is you are just as likely to alter your partner’s personality as you are their investing style. Some people are spenders, some people are savers and, while that doesn’t translate directly to investing philosophy, there are also gamblers and conservatives among us.
Kristy Maurina, a divorce lawyer with MacDonald & Partners LLP, says investing conflicts “come up all the time” after a marriage blows up.
“Sometimes it’s ‘I had absolutely no idea he was doing this or she was doing this with our money’.” And then they are mad that the money was spent this way because they are separating,” said Ms. Maurina.
Your recourse in divorce to go after your spouse for so-called bad investments is going to be difficult. “There are sections in the legislation that identify issues where one spouse has depleted the assets without the knowledge of the other,” said Ms. Maurina, referring to Ontario law. Divorce law varies by province.
The advice we give these clients is that first and foremost is that honest communication is critical
She says the courts “don’t want to micro-manage investments. You win on some investments and you lose on some.” You can apply to the court to get a larger claim in divorce than you might otherwise be entitled to based on poor investing but you probably won’t have much luck if your spouse just made a bad call on the market.
“If you have someone investing and it turns out at the date of separation those investments happen to be losers then oh well, you shared in the gains and now you have to share in the losses,” said Ms. Maurina, noting some people get purposely reckless during a separation and that’s a different story.
Scott Hannah, chief executive of the Vancouver-based Credit Counselling Society, said relationships with investing extremes can prove the most problematic.
“The advice we give these clients is that first and foremost is that honest communication is critical. You have to really put your cards on the table,” said Mr. Hannah. “You have to say what you are comfortable with and what you are not comfortable with.”
He suggests ultimately couples need to have defined parameters about how money can be invested or they’ll end up in conflict.
“You might be prepared to just take a risk of 10% of your funds. It is critical that the limits are followed,” said Mr. Hannah. “It has to be tracked and monitored [by both spouses].”
Ultimately, can you have a relationship where two people have different investing philosophies? “It’s difficult at best, you add tremendous stress to a relationship,” said Mr. Hannah.
It might be just easier to convert someone to your religious or political beliefs.
