By Tim Grant Pittsburgh Post-Gazette
WWR Article Summary (tl;dr) A 2016 study by the National Endowment for Financial Education showed 75 percent of couples who concealed information from one another saw negative consequences in the relationship, with 13 percent divorcing or separating.
On the day that financial advisers at PNC Wealth Management were set to meet with a married couple to discuss their account, the husband, who had been making a lot of withdrawals, showed up early and asked for a favor.
He wanted the advisers to tell his wife that the account had lost value over the past year due to market conditions. She didn't know about the withdrawals he had made.
"It happened about 15 years ago. I was not involved, but an adviser who was involved said they told the man no. They needed to be open, honest and transparent about a joint account," said Kevin Brubaker, an adviser with PNC Wealth Management in Pittsburgh.
"So the wife comes in and they go over everything," he said. "She asked about the withdrawals. The husband fumbled around for some answers. She stayed calm, but I can imagine it was not a good car ride home."
Brubaker said that a couple of years later the couple separated and eventually divorced.
While finances may not be the most romantic subject to discuss over an intimate dinner, financial advisers say it's a conversation that should be had sooner rather than later.
Earlier this year, a Hoboken, N.J.-based company that matches college students with private student loan lenders surveyed 800 people who are married or in a self-described "significant relationship," and found 23 percent of high-income individuals reported having a secret credit card or bank account.
"We found it interesting that the higher the income a couple has, the more likely one of them has a secret credit card or bank account," said Dave Rathmanner, a vice president at LendEDU. He said his company conducts surveys on financial issues to help better understand links between money and human behavior.
"Having more money can lead to more secrets," he said. "Having less money leaves less room for concealment. If or when a spouse finds out about a secret account, it could lead to trust issues, not only with finances but trust in general, such as having an affair."
The LendEDU survey also found 32 percent of people said honesty about personal finance is more important than honesty about fidelity.
"Sticks and stones may break my bones, but my credit report is forever," said Nathan Matherson, the company's CEO.
If marriage is in the foreseeable future, it will require creating a joint budget to determine how much each person contributes to living expenses. If one or both of them is bogged down with debt, it will affect big financial plans like buying a house or car.
Married couples also share part ownership and part liability for all assets acquired during the marriage.
A 2016 study by the National Endowment for Financial Education showed 75 percent of couples who concealed information from one another saw negative consequences in the relationship, with 13 percent divorcing or separating.
Brubaker at PNC said this is a good time of year for a financial plan or a review of investments.
He said he and his wife Karen are prime examples of a couple who waited until after getting married to lay all of their financial cards on the table, something he would not recommend.
Five years ago, they both worked for PNC Bank and had dated a number of years. While on vacation in California, he proposed to her on a Thursday and they decided to get married that Saturday while on vacation at Pebble Beach.
"The people at the resort where we were staying set up everything we needed for the wedding ceremony," Brubaker said. "But prior to proposing, we had never had that conversation on debts and assets. We had to have a quick discussion about what we were signing up for. Fortunately, we were both in good financial positions.
"It wasn't just a decision about love," he said. "We were putting our lives together."
While prenuptial agreements are likely to cover most, if not all, of the important financial issues, Brubaker said PNC advisers don't always recommend couples go that route unless one spouse comes in with significantly more assets, or it is a second marriage or there are children involved from a previous marriage.
He said it's always easier when couples are able to simply have a conversation about their finances.
"It is an important talk to have," Brubaker said. "It's not always easy or fun. But it needs to be done."