Living Together, But Investing Apart

couple investingLadies and gentlemen, may the best investor win. Sick of squabbling with one another as stocks tanked, some married couples have decided to draw a red line through their financial houses. They?re splitting their portfolios, opening separate accounts and making sure that each has a full say in how at least some of their money gets invested. Often these spouses simply want to pursue divergent goals, whether that?s due to a difference in their retirement ages or in their priorities over what to save for.

The industry hasn?t measured precisely how far this trend has spread, but evidence of its existence is steadily mounting. A survey released in 2009 by the money-transfer service PayPal, for example, discovered a full 57 percent of couples had some financial accounts separate from each other, up from 48 percent the year before. Experts think that may be a new high watermark: Financial separation is ?probably going on more this time than in previous downturns,? says John McInerney, an adviser whose Orlando-based firm has seen more than half its 340 married clients split their assets to pursue different investing strategies.

Sarah Lee and Norman Marks are fairly typical of the new breed. The happily married couple try to do everything together, whether it?s sailing down the Panama Canal or walking Lola, their bichon frise. But investing is no longer on that list. After the market crashed, the Henderson, Nev., pair went looking for a broker who could accommodate both Sarah Lee?s conservative investing style and Norman?s more aggressive approach. Unable to find one, Sarah Lee, 51, proposed they split their account and each take half the cash to their own advisers. Norman agreed. Now each spouse gets an individual monthly statement, and if those separate phone calls with their brokers aren?t enough, a 10-minute drive gets them to either adviser?s office.

The impetus for this financial drift, of course, has been the crash of 2008. It didn?t take long after the crisis erupted before financial advisers started hearing the four words every spouse hates most: ?I told you so.? Some witnessed verbal blows and tears; one reports a client so exasperated with her husband?s investing that she lay down on the office couch in protest. (Financial therapy, perhaps?) Indeed, 43 percent of couples say the recession has caused them to argue more often, and at online brokerages like TD Ameritrade, officials say spouses are increasing their use of tools that let them closely monitor their partner?s trading gains and losses. Financial professionals say their married clients are also reassessing how much risk they?re each willing to take during this recovery ? and finding they aren?t on the same page.

But going solo isn?t always as simple as it sounds. Marital tensions can rise along with competitive pressures, as the spouse who?s used to being in control suddenly has to contend with a loved one?s newfound financial savvy. What?s more, turning one big pot of money into two smaller ones erases some of the advantages that wealthier account holders get; as a result, dividing accounts can leave both spouses paying higher commissions and fees or being denied access to certain investments. Still, couples have found ways to avoid some of these pitfalls, and many are embracing the opportunity to jointly save for what their family needs (college tuition, for example) while individually splurging on what each spouse wants most (think motorbikes and far-flung getaways). As for all that bickering over investment bucks, well, they?re working on it.


Spousal spats over investment losses certainly increase whenever there?s a market downturn; the difference is that the wipeout of 2008 affected so many more people. When the tech bubble burst 10 years ago, for instance, it wiped out $5 trillion in wealth. This time around, stock values plunged $13 trillion, shrinking retirement accounts an average of 40 percent, according to the Urban Institute, a public-policy research group. Rising unemployment and tanking real estate values elevated the anxiety quotient even higher. The result: 41 percent of husbands and 54 percent of wives now say their risk tolerance has changed due to the market?s volatility.

When couples sever investing ties with one another, they have more tools than ever to help them go off on their own. The number of people who place their own trades online has almost doubled during the past decade, to 30 million, and the discount-brokerage industry has rolled out more account-monitoring features and resources like videos, blogs and podcasts to help educate those who want to take investing responsibility into their own hands.

And while a generation ago, many women had no role in their families? investment decision-making, today it?s women who are more likely to use these tools to get up to speed. According to a 2009 survey from brokerage Scottrade, more women than men say they?ve responded to the current climate by familiarizing themselves with their financial situation, learning more about how the economy works and conducting additional research before making an investment.

Just sneak a peek at the trading screen that Dawn Weinkam keeps on all day at her home in Catonsville, Md. When this mother of eight isn?t busy folding laundry or preparing vegan meals for her family, she can often be found flipping through investing books, watching financial news ? and monitoring the ups and downs of her online brokerage account at TradeMonster. She?s been at it for only about a year, but the 45-year-old?s gains have already grown enough to motivate Louis, her husband, to do better in his own account. ?He?s in competition with me,? says Dawn.

The couple says they try to keep their rivalry lighthearted, but it isn?t always easy. Louis, a 46-year-old attorney, says that if one of his wife?s stock picks turns out to be a loser, she doesn?t want to hear about it from him. Dawn has found that Louis is sometimes too quick to hit the ?sell? button: After the Dow ran up 20 percent from last March?s lows ? its best four-week performance since 1933 ? Louis cashed out his holdings in financial companies like JPMorgan Chase. Dawn, on the other hand, stayed put and watched her investments double, thanks in part to some shrewd bets on U.S. Steel and Genworth Financial. As a reward, she has used some of her returns to fly her mother and 21-year-old son to New York City, complete with a stay at the Waldorf Astoria and front-row seats to a Broadway show. ?She wants to beat me,? says Louis, ?and she already has.? (Though that didn?t stop Louis from splurging on his own trip ? to Vegas.)

Experts warn that competing couples could get into trouble down the road if ?one person is trying to out-earn the other and taking higher risks than they should,? says Manisha Thakor, a former portfolio manager and co-author of ?Get Financially Naked.? But for couples who have spent years investing together, it?s challenging to walk the fine line between showing concern for a loved one and staying out of his or her business. While Norman and Sarah Lee Marks rely on their own brokers for advice, they still check in with each other before making a move. When Norman wanted to invest $50,000 in a mutual fund, for example, Sarah Lee thought it was too much ? she believed the market was going to drop ? so she asked him to cut the amount to $25,000. (He settled on $37,500.) And when the couple?s monthly statements come in the mail, Norman says they still read the documents together. (Just to make sure there aren?t any unnecessary commission charges, he insists.)


Though it may be personally satisfying, some couples find that going separate ways can create an unwelcome disadvantage: twice as many bills. Some full-service advisers, for example, charge lower fees for clients who reach a certain threshold level of assets. But once spouses split their accounts in half, they individually could get charged higher rates, due to administrative charges or transaction costs associated with smaller accounts, says Timothy Maurer, a director at a financial-planning firm in Hunt Valley, Md. That could mean the difference between paying 0.8 percent of assets and paying 1 percent annually; while that may sound negligible, in five years it adds up to an extra $2,500 in fees on a $250,000 account. At discount brokerages, which typically charge a fixed commission for each transaction, a couple could easily double their costs. ?If they trade separately, they?ll have separate commissions,? says Jared Levy, senior derivatives specialist at Peak6 Investments, a financial-services firm.

For those who fall short, a little negotiating can bring some perks back. ?In many cases, it?ll be yours for the asking,? says Lynnette Khalfani-Cox, author of ?Investing Success.? Certified financial planner Rick Kahler has long charged clients in Rapid City, S.D., a minimum of $5,000 a year and required they hold at least $500,000. But he says he recently shaved $1,000 in fees and $100,000 from his minimum for a woman who wanted to stay on board after her husband moved some assets into a new account to day-trade on his own. The Markses have had some luck on this front. After going through the trouble of opening two different accounts, they learned their brokerages were merging. But Sarah Lee made the most of the situation by persuading their advisers to value their two accounts as a single unit. The move won them ?privileged? status, she says, which means their brokers approach them with offerings that smaller-fry clients don?t get, like certain municipal-bond issues and first-tier initial public offerings.

But no matter how excited a couple may be about their new opportunities, it?s still painful when an investment goes sour. Over the 10 years they?ve been married, Adam and Julie Bray-Ali of Alhambra, Calif., have managed many of their accounts separately from one another. Julie, a college professor, has used some of her savings on trips to Italy, England and Japan, while some of Adam?s earnings as an information technology administrator have gone toward motorbikes and antique furniture, like the $10,000 table in their dining room.

But one of Adam?s main investments has been residential real estate ? over the past decade, he has bought several multiunit buildings and rented them out ? and that?s where his troubles began. As the crash accelerated and local vacancy rates soared, his apartment empire started losing money. Adam was soon draining his savings to cover the mortgage and maintenance on empty apartments. Finally, last summer he phoned his wife while she was visiting her folks and offered a confession: ?I don?t have enough money.? Julie let him tap her account to cover some expenses ? though she?s hoping it doesn?t happen again. ?His finances are the last thing I want to be concerned about,? she says.