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How Couples Can Marry Clashing Investment Styles

June 19, 2018
Advisors, Investing
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No matter how much you and your partner have in common, investing will uncover differences. Maybe one likes playing it safe while the other relishes risk-taking. One wants to invest every available penny, while the other yearns to live it up now. Or perhaps you disagree on when to retire.

Differences are inevitable, says Kathleen Burns Kingsbury, founder of KBK Wealth Connection in Waitsfield, Vermont. “That’s the nature of a partnership.”

But some couples don’t discover their differences until they fester into conflicts. You can avoid discord by bringing financial topics into the open, finding common ground and compromising.

“Learning how to talk about and work through conflict will make you stronger partners,” says Kingsbury, author of “Breaking Money Silence: How to Shatter Money Taboos, Talk More Openly About Finances, and Live a Richer Life.”

Here are some typical investment-style clashes and tips for couples to confront them.

Invest for retirement vs. spend today

Some ground rules can help bridge the gap if one of you is more of a spender and one is more of a saver and investor, says Jeff Motske, a certified financial planner and CEO of Trilogy Financial in Huntington Beach, California. The author of “The Couple’s Guide to Financial Compatibility” advises:

  • Decide a certain amount, such as 1% of gross income, that each partner can spend annually, no questions asked.
  • Use automatic contributions to tuck money away before either partner is tempted to spend it. Aim to invest at least 15% of income in your IRAs or 401(k)s.
  • Unable to save? Agree to track spending to see where the money goes — and resolve to discuss without judgment so you can compromise on a budget.

Play it safe vs. invest aggressively

Aggressive investors will risk bigger losses for potentially greater returns, while conservative investors will settle for lower returns with less risk.

You can each pick investments for your own retirement accounts based on individual attitudes about risk. But both partners should understand how risk affects potential returns and the consequences of taking a lot or little risk, says Carolyn McClanahan, director of financial planning of Life Planning Partners in Jacksonville, Florida.

A robo-advisor or human financial advisor can help you understand and choose diversified investments to match your goals, risk tolerance and investing timeline.

Also important: Knowing how your approaches will blend into a shared retirement. Consider visiting a financial planner together. Financial planning software and professionals can demonstrate how various risk and investment mixes affect the likelihood you’ll have a healthy nest egg.

Dominant vs. avoidant money styles

Motske tells of a couple in their 60s. “He fell down the stairs and never woke up. She came in and didn’t even know how to write a check. She had no idea about money.”

One spouse might enjoy dealing with finances more than the other, but both should understand where their money is going.  “You don’t need to be an expert, but you need to be in the loop,” Motske says.

He suggests a monthly “money date” to talk about financial goals. Choose a relaxing backdrop to make it fun, whether it’s a favorite restaurant or a drive in the country.

Retire early vs. later

Half of couples disagreed on the age they wanted to retire in the 2015 Fidelity Investments Couples Retirement Study.

Ask why your spouse wants to retire at a given time, and keep unpeeling the layered reasons until you reach the heart of the matter, McClanahan says.

A spouse whose parents died in their 60s might want to retire early to avoid missing out on carefree years, for example. The other spouse, meanwhile, might fear having a bored partner around the house 24/7.

Resolving a conflict is easier when you understand each other’s motivations and can view them with compassion. Then, you can discuss how to satisfy concerns on both sides and can explore what you both want to do in retirement. How will you live fully?

“The happiest people are people who have a sense of purpose and a sense of self,” McClanahan says.

Socially responsible investing vs. the bottom line

Sometimes one spouse wants to do good through investing, but the other wants to focus solely on getting good returns.

Agree to disagree before discussing, Kingsbury says. Focus on understanding your partner’s perspective and laying the groundwork for further dialogue, rather than proving them wrong. Bring an open and curious attitude, and practice active listening to find common ground, she says. Socially responsible investing and achieving solid returns aren’t mutually exclusive goals.

Getting help

Still struggling? Consider seeing a couples-friendly financial advisor. When interviewing potential advisors ask how often they work with couples and whether they’re comfortable addressing conflicts, Kingsbury says. Here are another 10 questions to ask a financial advisor.

Avoid the temptation to put off addressing issues. “Deal with it now or you’ll have to deal with it later,” McClanahan says. “The best-adjusted people know how to have open conversations around hard subjects.”

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