Who Makes The Money Decisions: The Man Or The Woman?

<p> By Linda Koco<br /> <a href="http://www.insurancenewsnet.com/">InsuranceNewsNet</a></p> <p> Not long ago, Spectrem Group asked married investors a simple enough question: “Who makes the financial decisions in your household?”</p> <p> The answer may provide advisors with insight into married clients who stall on important decisions or send mixed messages about who will make the call.</p> <p> In brief, the sexes did not agree, not by a long shot. Even so, Spectrem president George Walper thinks advisors should approach couples with the assumption that spouses make decisions jointly.</p> <p> <strong>Most women say joint, but most men don’t</strong></p> <p> Here’s what Spectrem found:  In the wealthiest households, three-fourths (75 percent) of women said they make the decisions jointly, but only 39 percent of the wealthiest men said the same, according to the firm’s 2015 survey on “Financial Behaviors and the Investor’s Mindset.” That’s a gap of 36 points. These were married households having $5 million to $25 million in net worth, not including primary residence (NIPR). Spectrem terms these households ultra high net worth (UHNW).</p> <p> Taken by itself, the gap is surprisingly wide. But it is even more surprising considering that a large majority (83 percent) of the UHNW claimed that their financial assets are mostly pooled.</p> <p> The findings would seem to counter a commonly held notion that spouses who pool assets are more inclined to make financial decisions jointly, given the joint interest each has in the outcome. The survey shows that the common notion isn’t necessarily the case.</p> <p> Another surprise is that a very similar pattern appeared in households of more modest wealth.</p> <p> For instance, among millionaire households ($1 million to $5 million in net worth, NIPR), three-fourths (74 percent) of women also said their households make financial decisions jointly, while only 43 percent of men said the same. That’s a gap of 31 points. The large majority (89 percent) of these households also claimed that “all or most” of their assets were pooled, much like the more well-heeled UHNWs.</p> <p> In mass affluent households ($100,000 to $1 million, NIPR), once again three-fourths (76 percent) of women said they make financial decisions jointly, while just 50 percent of the men said the same, making for a gap of 26 points.</p> <p> However, where pooling of assets is concerned, only 62 percent of the mass affluent said they pool. That’s still a clear majority, but 27 points lower than millionaires and 21 percent lower than UHNWs. Spectrem observed that in two-income mass affluent households, pooling of assets is lower (than it is in one-income households) but that joint decisions are more prevalent.</p> <p> <strong>What to make of it</strong></p> <p> Some of the male-female divide may reflect the fact that the men and women surveyed were from different households,  Walper told InsuranceNewsNet, explaining that researchers talked to just one person per household.</p> <p> But he said divergent responses are not entirely surprising, in view of other Spectrem research showing that the sexes do respond differently to survey questions. He prefers to view the differences revealed in the 2015 study as “interesting.”</p> <p> Some of the divergence could reflect a difference in personal style, he suggested. For instance, spouses may make decisions separately but may still be equal or joint on matters of income. If the spouses are still working, they may have 401(k) assets that they handle separately. Some may have two houses, jointly owned but with decisions about them made separately.</p> <p> Whatever the reason, the survey identified some common decision-making patterns, including the following:</p> <ul> <li> <em>Wealth impacts it</em>. Wealthier marrieds are far less likely to report joint financial decision-making. For instance, on an overall basis, the data showed that only 39 percent of UHNWs said they make decisions jointly while 61 percent of mass affluents said the same.</li> <li> <em>Women think “joint.” </em>Three-fourths of women, at all three levels of wealth, said their households engage in joint financial decisions, while men were “far less likely” to report joint decision-making “regardless of wealth.”</li> <li> <em>Age can be a factor</em>. The millionaire study found that the percentage of households that say they make joint financial decisions decreases as age increases. For example, a slim majority (52 percent) of the 65-and-older age group reported joint decision-making, while a clear majority (61 percent) of the age 35-and-under group said the same.</li> <li> <em>Pooling of assets declines with higher incomes and higher ages</em>. The percentage who said they pool all their finances decreased as income and age increase. For example, 66 percent of marrieds age 55 and under with annual incomes of $100,000 to $149,000 said they pool finances, but only 52 percent of those ages 66 and older with incomes of $150,000 and up said they pool.</li> </ul> <p> <strong>Assume joint decision-making</strong></p> <p> Even though spouses may differ on joint or solo decision-making, “advisors should look at every couple as if they make joint decisions,” Walper told InsuranceNewsNet.</p> <p> This should occur whether the advisor is male or female, he added. He explained that other Spectrem research has found that, when clients evaluate financial advisors, they look for competency, not gender. “They measure competency according to responsiveness, preparedness and providing education on more than investing. They want help understanding their families, selves and overall needs,” he said.</p> <p> In addition, earlier Spectrem studies have found that 17 percent of millionaires and 15 percent of UHNWs would consider changing advisors if their advisor talked only to their spouse, according to Walper. “We asked why, and the answer was consistently for lack of responsiveness or proactivity. It was never about fees or performance,” he said. The study concluded that advisors who present communications and decisions to both parties equally will help build trust and credibility.</p> <p> Another reason for advisors to assume that decision-making is joint has to do with longevity. Women live longer than men, the researchers said, so “it is important to form relationships with both spouses.”</p> <p> The advice holds even when working with UHNW clients, although for an additional reason. Where both spouses have careers, they are “almost equally likely” to be joint-decision makers as are households where the husband is the only decision-maker. “Therefore it is important to include both spouses in financial discussions,” the study said.</p> <p> <em>InsuranceNewsNet Editor-at-Large Linda Koco, MBA, specializes in life insurance, annuities and income planning. Linda can be reached at </em><a href="mailto:[email protected]"><em>[email protected]</em></a><em>.</em></p> <p> <strong>© Entire contents copyright 2015 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.</strong></p> <p>  </p>