Anyone who has forged a happy, lasting marriage will tell you: communication is crucial. One increasingly important topic for newly joined couples is whether or not to combine financial lives. Should you work with one financial advisor or two?
By Danielle Crafton
Wealth Advisor, Regions Private Wealth Management
According to the U.S. Census Bureau, the median age at first marriage has never been higher (just shy of age 27 for women and 29 for men), which means many people enter marriage after already launching their careers and starting to invest for the future.
Decisions about how, or even whether, newlyweds should combine their investments—and this applies to second marriages too—should be made after an honest, wide-ranging discussion. Consider these questions as conversation starters.
1. Is duplication worth the price?
One reason to combine investments is to avoid paying fees to two Wealth Advisors, especially if both provide similar services. If you decide each advisor brings something uniquely valuable to the table, you need to ensure that their advice doesn’t put you at odds with each other. If you and your new spouse are guided by two very different investment strategies—for example, one of you favors a very aggressive approach, while the other would prefer a much more conservative strategy—you may end up with an overall portfolio that serves neither one of you well.
2. What are the implications for taxes and estate planning?
Keeping investment accounts with separate advisors could mean missed opportunities for tax savings. For example, if one of you sells stocks and realizes a large capital gain that could then be offset by selling a losing position in the other’s portfolio. Additionally, with a joint portfolio, you would avoid duplicate holdings, which can lead to an overconcentration of stocks and higher risk.
3. In what other situations does it make sense to keep finances separate?
If one or both of you own considerable assets, perhaps from an inheritance, there may be good reason to keep that money separate. Doing so could help protect you in case of divorce or if your spouse is sued or faces claims from business creditors. If this is a second marriage, it could make sense to maintain at least some separate accounts to pass along assets to a child from a first marriage.
4. How will you choose a Wealth Advisor?
If you decide merging your lives should also mean combining your investments, selecting your new Wealth Advisor will involve asking candidates some of the same questions you did when you were single—ranging from investment philosophies and strategies to accessibility and fees. The most important consideration may be finding someone who really listens to what the two of you want to accomplish and can present an effective road map for achieving your goals and objectives.
