According to a new survey published by Orion Advisor Solutions, a majority of Millennials consider dishonesty about money to be a form of infidelity, but many of them also say that they’ve lied about a purchase or kept debt a secret from their partner.
Dr. Daniel Crosby, chief behavioral officer at Orion — a turnkey asset management platform that supports more than 2,300 advisory firms — said the company undertook this survey to better understand their clients. It surveyed 500 U.S. residents with an annual household income of at least $150,000 and at least one investment in stocks, bonds, or mutual funds, and found a huge disconnect between couples and their views on finances.
“We found in our research that [money is] the number-one thing that couples fight about in the first and third year of marriage,” Crosby said. “The points of friction between loved ones are going to be emblematic, because that’s something that they care deeply about.”
Fears about market risk and the economy topped the list of the greatest sources of financial disagreement, with 35 percent of respondents choosing this response, followed by the question of whether to spend for today or save for tomorrow, at 29 percent. Nearly a third (27 percent) of respondents had money-related disagreements with their partner at least monthly. Millennials had a much higher frequency of such disagreements, with 49 percent saying that they have money-related disputes with their partner at least once a month. In comparison, 36 percent of Gen X respondents said that they have monthly disagreements about money, while Baby Boomers came in a distant third, at 12 percent.
And investors don’t just want their financial advisors to manage their assets — they want holistic advice. About 67 percent of young investors recently surveyed by Fidelity expect their advisor to provide services that go beyond financial advice and investment management. Crosby said that advisors not only need to be aware of these points of friction, they also need to address them with their clients.
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Advisors should also be aware of generational gaps. Nine percent of all respondents said they had debts that their partner was unaware of, while 25 percent said that they had kept a purchase secret from their partner for fear that they might disapprove. However, this number increased substantially when it came to Millennials, with 24 percent saying they had debts that their partner didn’t know about and 43 percent admitting that they had kept a purchase secret from their partner. Surprisingly, 53 percent of Millennials and 55 percent of Gen X-ers said they had weekly conversations about finances with their partner, while only 38 percent of Baby Boomers said the same.
Despite these numbers, 49 percent of all respondents said they believed that lying about money was a form of infidelity. Millennials felt most strongly about this, with 61 percent equating dishonesty about money with infidelity.
“The question then becomes, ‘If I can’t trust you to be honest about money, what else can I not trust you about?’” Crosby said. “On the flip side — and this is where it matters to advisors — couples who do have their financial act together exhibit a host of other positive outcomes, including better marriages, greater levels of preparedness for a ‘rainy day,’ and higher levels of happiness. Money is so central to our lives that when it’s bad, it’s very bad, and when it’s good, it raises all relational boats.”
In response to this survey and other research conducted by the firm, Orion has created a free, 20-question behavioral finance assessment tool called BeFi20, which is designed to help advisors bridge the disconnect between couples. Advisors can share the assessment tool with their clients, with both partners taking the assessment separately. The tool then compares each person’s results and communication style and provides actionable tailored responses that explain how each partner can learn to better communicate about their finances. Any advisor can use the tool, but only Orion Advisors will be able access the online portal connected to its Redtail CRM software to see their clients’ results.
Crosby believes that the tool can be useful not only for couples, but also for anyone who may soon be going through a generational wealth transfer. According to Fidelity, advisors have reached out to only 13 percent of their clients’ adult-age children — a surprisingly small number, since more than 70 percent of heirs are likely to fire or change financial advisors after inheriting wealth from their parents.