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Advisors As Mediators: Helping Couples Settle Financial Disagreements



Financial advisors are paid to plan a family’s long-term future, but when couples disagree about their plans – for example, what to leave to or withhold from heirs, how to divide assets in a marital split -- what then?

Then it’s merely a good opportunity for advisors to step in, counsel and perfect the art of compromise.

It doesn’t always work, of course, but for advisors who can get people talking, the effort is worth the reward, said Juli McNeely, president of Wausau, Wis.-based McNeely Financial Services and president-elect of the National Association of Insurance and Financial Advisors, which represents fee-only and commission-based retail advisors.

McNeely encourages advisors to have a squabbling couple discuss the issues in person. If the meeting doesn’t work the first time, then clients can go home, think about their discussion, return and speak some more.

Talking helps clients clarify what they want, or what they think they want. Regular communication often leads to financial alternatives that couples hadn’t thought possible.

It’s a secret that every professional mediator, arbitrator and skilled diplomat knows, but that may not be obvious to newbie financial advisors. “You’ve got to read body language, got to read between the lines,” McNeely said in an interview with InsuranceNewsNet. “Tell them ‘I’m sensing you are feeling this way,’ and call it out.”

The role of counselor is often draining, McNeely said. In some instances, she’s been able to tell even before getting into the thick of the dispute whether a couple is headed for divorce. “You are trying to understand both people’s perspective, and people are not articulating it well,” she said. “It can be a bit of a job for you to get them going in the right direction.”

In an interview earlier this year on the subject of keeping financial secrets, Joel E. Twedt, a Lake Mills, Iowa-based investment advisor for Twedt Financial Services and Securian Advisors, MidAmerica , said he’s sometimes amazed at what clients reveal.

“We are also working with their emotional wellness because everything revolves around money at the end of the day,” he said. Relationships between spouses and their children are often the most difficult conversations to have. “Numbers are the easy part,” he said.

Perhaps advisors ought to add the moniker “emotional planner,” to their resume.

McNeely said it’s important to ensure that both spouses understand whatever it is they have decided to invest in, how the investment works and who benefits. That’s the first rule of investing – know what you are buying.

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Yet it is also a rule easily overlooked in the heat of dispute, particularly if some of the decisions are joint decisions and others separate decisions, and there’s nothing like fighting over money to bring out the worst in men and women.

Whether a financial planning decision is made jointly or separately has a “significant influence” on the investment strategy, according to Michael Liersch, head of behavioral financial with Merrill Lynch Wealth Management.

When clients don’t completely understand their investments, it is a signal that the advisor hasn’t done his or her job, McNeely said. “If they understand the product, then the decision becomes very simple,” she said. “If it’s a struggle, I’ve not done my job.”

For decades, men were the breadwinners and the “favored half” of a couple. Advisors spoke with men first regarding financial planning. Now this dynamic has changed.

McNeely said that in her experience, women approach investing from more angles than men and often ask more questions. It’s no longer safe for advisors to assume that men are the decision-makers in the household.

“Men are pretty good with basic information,” she said. “Sometimes you have those that want to dive in deep but women tend to ask more questions and perhaps you can say they need more time to make a decision but they are becoming the decision maker many times.”

If the husband dies first and the assets are passed on to the spouse – as is often also the case – advisors need to be conscious of the fact that if widows don’t care for their spouse’s planner, she’ll happily take her assets to another advisor.

“It's an interesting dynamic,” McNeely said. “As advisors, we have to pay attention to all the individuals in the mix. You can't just focus on one.”

is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].

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