Traditionally the role of managing the family finances was the responsibility of the husband/father of the household. This included budgeting, insurance payments, remaining up-to-date with taxes and paying rates and other bills. Eventually this trend could include the management of a couples retirement funds.
Unknowingly this trend could arguably cause financial phobia for the spouse. Spouses should both be involved in financial decision-making wherever possible. Fortunately there is a trend amongst newlywed couples to be jointly involved in the family finances.
A US-based study was conducted in 2010 by Prudential on the ‘Financial Experience & Behaviors Among Women’.
Of the 1 250 women surveyed, “Three-quarters would rely on their spouse or partner as a critical source of input and guidance” with regards to financial decision-making.
Financial confidence is based on knowledge
“Very few women feel ‘very prepared’ to make wise financial decisions. The most prepared women are the most on track to reach their retirement goals, protect their assets, and generate future income,” states the Prudential study. “This ‘very prepared’ group is also most likely to have an advisor (53%) and to understand complex financial products like annuities (68%). Half of the women surveyed say they “need some help.” These women are on the right track and know how to protect their investments from losses (65%). Many in this group use a financial advisor. More than a quarter of this group feel they aren’t saving enough for retirement.”
A financial adviser can play an important role in ensuring that a widow is advised appropriately as to her financial situation and financial security, be it in a pre- or post-retirement context.
By definition, one of the key aspects of financial planning is to have a realistic financial plan. For those who manage their own investments and create their own financial plans, it is important to acknowledge that you should have a financial adviser who you feel you can trust and rely on to help guide you in your financial-planning processes, particularly in the later stages of retirement. In the event of your death, they can continue to advise the surviving spouse according to the agreed-upon financial plan.
“Many women (59%) are open to the idea of letting an advisor lead their financial planning. Women believe getting the help of a professional can be a critical step in achieving financial security. Yet only 19% are ‘very’ comfortable letting an advisor take the lead,” Prudential found.
The study found that women find it a daunting task to let a financial advisor take the lead. It therefore supports the argument that a collaborative plan needs to be in place between a couple and a financial adviser, whereby they are able to step into the lead role without causing unnecessary anxiety to the remaining spouse as there should already be a long-term trusted relationship in place.
A qualified financial advisor can also assist with efficient estate planning that can ensure the protection of assets, plan for business succession, make arrangements in the event of incapacity, transfer assets more tax-efficiently and, if necessary, give advice on existing trusts and how they should be structured.
Your financial adviser should not be a salesperson who sells insurance or investment products, but rather a professional who can assist with holistic financial planning.
API prides itself as being a team of professional financial planners who can assist clients based on their individual needs and objectives.