Clients being completely open about their finances is the only way to build a truly holistic picture of how to help them achieve their financial goals, but what if someone’s keeping secrets from them?
While they may believe that they have shared all there is to know, a new survey from Bankrate finds a high level of "financial infidelity," or spouses and partners keeping secrets about their financial situation.
It appears to be common, with more than two in five respondents who are married, in a civil partnership, or living with a partner admitting to keeping a financial secret from their partner now or in the past, often because they just don’t talk about finances with loved ones.
Spending more than their partner would be comfortable with (30%), holding secret debt (23%), and having a secret savings account (19%), credit card (18%), or checking account (17%) are the most likely financial secrets kept from partners.
Keeping secrets such as these are more prevalent among younger Americans. While around one-third of Gen Xers and boomers have at least one financial secret, this rises to 57% among millennials and 67% among Gen Zs.
Those who have an annual household income below $100,000 are most likely to commit financial infidelity, around half compared to a third of those with higher incomes.
The research found that 37% of those that have financial secrets do so for privacy or to have control over their own finances.
But for many respondents the subject never came up (33%), highlighting a lack of open communication about financial matters. Being embarrassed about not being on top of their finances, not trusting their partner with money, and due to money being used for an addiction were all often cited reasons.
“Financial secrets can take on a life of their own and undermine the relationship. In years of studying this, we've often found that the breach of trust has a greater impact than the dollars and cents,” Bankrate senior industry analyst Ted Rossman. “If you have a secret spending habit or undisclosed debt or a credit card or bank account that your spouse doesn't know about, I think it's best to come clean right away.”
Relationships are key to our business but advisors are often slow to engage in specific activities designed to foster them.
Whichever path you go down, act now while you're still in control.
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