How advisors can help clients plan financially for weddings

September 6, 2023 6:52 PM

Newlywed couple hands with engagement and wedding rings

Financial advisor Robert "Rob" Bolden thought he was ready to get married when he proposed to his now-fiancée.

Robert "Rob" Bolden, the lead wealth advisor at Bolden Wealth Management, with his fiancée.

"I had done a lot of planning beforehand," said Bolden, whose wedding is set for Sept. 17.

Bolden, the lead wealth advisor at registered investment advisor Bolden Wealth Management in Royal Oak, Michigan, also helped two clients with planning their weddings earlier this year. In his own case, Bolden was pleasantly surprised to receive help from an unexpected source — his fiancée's aunt, who had ample experience in family wedding planning.

"When we got engaged, the next day — I mean, literally the next day — she had spreadsheets, she had price points, she had things for us to look for," Bolden said of the aunt, laughing. "She had everything. … So we started doing wedding planning the next day!"

Weddings are a major personal and financial milestone in the life of many clients in wealth management — either their own special day, or the wedding of a child, family member or close friend. But weddings today can cost an arm and a leg, which makes proper planning around them critical. The mean cost of a wedding in America was $30,000 last year, according to wedding industry website The Knot — and that figure, which fluctuates across states and cities, doesn't include common extras like the engagement ring or honeymoon.

The complications of joining two households together can also impose stress on couples, as well as the risk of asset loss in the event of a divorce.

The good news is, for advisors looking to stand out and differentiate with services suited to multigenerational families or younger clients who are early in their wealth building journeys, walking a couple through this process can be a valuable opportunity to grow their business.

FP heard from many experts on how advisors can ensure their engaged, soon-to-be-engaged or newlywed clients are set up for financial success. Below are tips they shared.

Perhaps the most unpleasant of experiences before a wedding, a prenuptial agreement can avert unintended nightmares down the road.

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Pop the question

When an advisor sees that a couple is engaged or on their way to that milestone, it's a good time to bring up a delicate question: What about a prenup?

"My recommendation has always been to initiate the discussion of a prenup before the engagement, but sadly the directive doesn't materialize until it is too late," said John C. Pak, a certified financial planner at Otium Advisory, an RIA based out of Los Angeles, California.

Advisors can help couples discuss this uncomfortable but important topic, Pak said. "When framing the discussion with 'risk mitigation' in mind, I have noticed couples being more receptive to the idea of a prenup or postnup," Pak said.

For Crystal Cox, a certified financial planner who is a Madison, Wisconsin-based senior vice president at Wealthspire Advisors, a New York-based RIA, "It's only awkward if the advisor makes it awkward." The advisor can acknowledge prenups are a touchy subject, perhaps saying something like, "Now, this is a little awkward, but we should discuss a potential prenuptial agreement."

Another option is to point out that such agreements can be empowering for couples rather than oppressive. "I always say, you have a prenuptial agreement one way or another. The only difference is whether you decide the terms or if you let the state decide," Cox said.

For Michelle Francis, a financial planner who is the owner of Life Story Financial, an RIA in Denver, Colorado, prenup discussions can feel encouraging rather than scary. "Rather than planning how to get divorced, they're setting themselves up with a solid foundation for how they plan to manage their money as a couple," she said.

Mediate values conversations

When joining their lives, couples need to get on the same page financially. Yet advisors told FP that this is one of the biggest stumbling blocks for clients.

Cox said she often sees couples failing to discuss money prior to marriage. "Finances are one of the top reasons for divorce, and I believe this could be significantly reduced with some honest conversation prior to marriage," Cox said. Advisors can help couples take the first steps toward financial transparency by discussing money values.

Cox suggests asking clients to talk about their attitudes on spending and saving, budgeting, using credit, paying bills. "Are you going to consolidate all your assets," Cox added, "or might one or both of you keep a separate bank account?"

Let all the cats out of the bag

Clients should avoid keeping financial secrets from their partner. In fact, half of Americans in a recent survey by Orion Advisor Solutions said they considered a partner's dishonesty about money to be a form of cheating.

"I find that it's common for couples not to share the balances on their large individual debts, especially credit cards or student loans. It can come as a big surprise to the spouse, and lead to feelings of embarrassment for the one with the debt," said Francis.

Clients may understandably shrink from such conversations, fearing conflict that could spoil a great relationship or drive away their partner, but an advisor can help both parties air their financial secrets in a safe space, so they can move forward as a united front.

Pak recalled a particularly egregious case where one spouse failed to disclose $200,000 of student loan debt and $85,000 in credit card debt. "Married couples must be mindful of hidden expenses, especially in community property states. If you reside in one of the nine community property states, the debt is shared."

Other hidden expenses that an advisor might unearth include a low credit score or poor credit history, Pak said. "A low credit score or poor credit history can turn expensive when taking on new financial obligations as a new unit."

To join or not to join accounts?

One of the biggest decisions a couple has to undertake as they approach wedded life is whether or not to merge their finances.

There's no one right way for couples when it comes to this question, according to Bill Nelson, a CFP and certified financial therapist-I, who specializes in working with engaged and newlywed couples. Nelson, the founder of Pacesetter Planning, an RIA based in Arlington, Virginia, said he's seen advisors and financial influencers insist on one approach or the other, allowing little middle ground. Yet every couple is different, he said.

"The optimal approach would be to find an account structure that is most in alignment with their financial values and attitudes," he said. Most couples he's seen prefer a hybrid approach — not completely combining accounts but also not keeping them entirely separate. For example, a couple might agree to join most accounts, but each put a set amount per month into their own checking accounts for personal spending, Nelson said.

"It gives them no-questions-asked spending money to manage on their own in a way that doesn't take away from their family's shared financial goals."

Keep the (budget) horse in front of the (spending) cart

The excitement of the wedding can lead some clients to look for a venue or nail down vendors before calculating the budget in detail, Bolden said.

"I think that's a little bit backwards," said Bolden. "Once you figure out what the budget is, what the cash flow is and what you can afford, then you can make the decision on where you want that place to be."

In drawing up the budget, advisors might ask clients to consider what else the money could be spent on — "the memorable experience or a portfolio that will help you retire sooner," Pak said.

Advisors can point out that nuptial frugality has definitely been trending during the COVID era — more couples are eloping or having "mini-monies," very small weddings. "For my soon-to-be wedded clients (who are fiscally responsible and have conscientiously avoided 'revenge spending' in the last two years), I have noticed smaller venues, more intimate guest lists, and less lavish trips," Pak said.

Additionally, "I highly recommend creating a shared Excel file, where spouses can collaboratively assign roles and agree on responsibilities (e.g., who picks the venues, who pays what, etc.)," Pak said. Clients should also create a contingency plan so money isn't wasted due to the unexpected, such as bad weather, he said.

Finally, clients should budget for a honeymoon. "A honeymoon can be expensive but is a great way to start a new life together and create lasting memories as newlyweds. I recommend that instead of asking for gifts, couples ask for donations to a honeymoon fund," Francis said.

Be open-minded with clients' wedding visions

A financial advisor might be inclined to frown upon nuptials that they find overpriced. However, this is the client's wedding, not your own — so instead of naysaying an idea, an advisor can ask: What trade-offs might be made so that the wedding goes as imagined, but doesn't derail other financial goals?

"We have our own biases," said Bolden. "Really listen to what it is that they want, what their values are, and serve them from that perspective."

Bolden said an advisor can help a client who is dead-set on a particular venue or a large celebration consider creative alternative ways to realize that dream.

"A few people who I've run into are already married and still performing a wedding later on, sometimes a year later," Bolden said. The thinking for those couples is: "'We'll have a year where we've been married, finances have changed, we've consolidated homes, maybe our expenses are a little bit lower. We're still able to save money, and we don't have the pressure of making all of this happen within the year.'"