"It takes two very grown-up people to handle this issue. And I speak from experience," says Cheryl Holland, president of Abacus Planning Group in Columbia, S.C. "My husband is very talented, extremely good at what he does as an architect. He makes extremely good money. The reality is my job is more financially lucrative. We have to be very open and respectful on how we play that out. For a lot of women who make more money, it's very anxiety producing to see themselves as the breadwinner. But if you're together enough to come to a financial planner, usually you're a pretty together couple."
Advisor Sharon Luker, a CFP licensee with VSR Financial Services Inc. in Dallas, says she thinks a marriage needs to be very strong for some men to adjust to their wives earning more than they do. "This even happens when you are single. I happen to be single, and if they perceive I make more money than they do, they treat you differently. They are competing with you."
Fred Raffety, president of Robert Lawrenz Consulting in Rockford, Ill., says he has advised couples in the past where the husbands couldn't adjust to their wives making bigger salaries, but Jody and Dennis Schumacher (see sidebar) are an example of one couple who did. Jody made millions and retired after she sold her photocopier and facsimile business, and Dennis has continued to work managing a pipeline for a gas company. "In this situation with Jody and Dennis," Raffety says, "I've always felt that he was strong enough and supportive enough that it worked for them."
Adds Raffety: "The concept of women making more money is still new enough that some guys can accept it and some cannot. It's always going to depend on the people, but I would suspect 10 years from now it's going to be more acceptable, and 10 years from then it'll be even more acceptable. I suspect there's been a force set in motion that is going to continue on here, and I think it will get better."
Yours, mine and ours
With one-earner couples, advisors say, money that comes in usually is thrown into one pot to be spent and invested as needed. But with many two-income couples, particularly those with two high-earning partners, separate expense accounts are common, with perhaps a joint account for household expenses. Sometimes, these couples keep their investments separate as well.
"In many cases where you have the couples who are both really active in careers, they make either joint decisions or they each make independent decisions on their own accounts," Lassus says. "We encourage that. We encourage a joint account for emergencies and reserves, but for investment accounts for estate planning and things like that, we encourage them to have their own separate accounts. Also, it's a good idea anyway, because if you have inherited assets or things like that you always want to maintain that separately."
One reason investments may be managed separately is because the partners have different investment styles. Luker notes the husband of one of her female clients uses a different advisor. Her client recognizes she and her husband may go further than most couples in separating their finances. "She says 'I've been married before, and I had a very controlling husband. I do my thing; my husband does his thing. We love each other. I pay this bill; he pays that bill. We have separate advisors, and we don't plan on bringing it joint. It works perfectly.' Her husband is a lot more aggressive an investor than she is, and in some ways, you do need two different advisors because some advisors are a lot more aggressive than others," Luker says.
Still, not all couples in which the wife has a greater income manage their money separately. Harper notes the physician couple he mentioned share decisions financially and pool their resources. Other advisors say they have some dual-income clients who take that approach as well.
Long-term planning
Financial plans can be just as complex for one-earner couples as for dual-income families, and both face many of the same issues, advisors say. Still, analyzing the financial situation of two high-earners can be more complicated. "If you have a couple where only one spouse is a wage earner, then you're only looking at one times all that stuff. If you throw in the two earners, especially if they're both at a high enough level that you're dealing with stock options, deferred compensation and all those issues, literally everything is times two, and it's very complicated. And very time-consuming to pull it all together and understand the impact," Lassus says.
One issue that can arise with couples in which the wife is the higher earner is whether more life insurance should be taken out on her. Some planners, like Holland, say her clients in that situation typically do take out more insurance on the wife. "That's a very easy decision to show people how to make. You do the numbers, and they draw the line. Basically, they absolutely need to pay off the kind of lifestyle they're typically living on a two-earner income," she says.