Thus, a lot of situations can lead to an economic imbalance in a couple.
- One family moves regionally or abroad to promote one spouse’s career, while the other puts their career on hold or suffers prolonged unemployment due to the difficulty of finding a job in the new environment.
- A mother stops working temporarily to care for a child while her partner works harder to make up for the financial shortfall. “What widens the income gap between spouses is often the arrival of children in the couple, explains Hélène Belleau. We know that it takes more money. Women take their maternity leave and take time to take care of children. Men work more. We know that men’s wages increase when they have children.”
- The member of a couple who earns the lower income is not able to save because following the lifestyle of the husband with the higher salary consumes all his money.
The management of the couple’s financial affairs or their marital status can sometimes rebalance this situation. For example, spouses are usually subject to the family property regime, which provides for the sharing of the value of the family property between the spouses, including pension plans and retirement benefits.
However, this rebalancing is not always present. Due to ignorance of the law that governs common spouses or for various reasons arising from the dynamics of love, couples clients allow financial inequity to persist in their union.
With her INRS team, Hélène Belleau conducted a large survey in 2015 of 3,250 Québécois from all regions to learn about their personal finance management habits. “We asked the question to our 1,683 respondents in municipal unions in Quebec and 45% believe that they have the same social status as married people. It is a mistake. And 4% do not know. In addition, 40% believe ( wrongly) that the poorer spouse will have the right to claim alimony for himself and 16% did not know,” explained the researcher.
Among other things, due to the effect of compound returns on long-term investments, inequity can also widen over time, especially since Quebec families often manage their pension funds separately .
According to the INRS survey, among married couples, 52% manage their retirement savings according to the “everyone for themselves” method and 48% put in their savings for their old age. Among the common couples, it is 74% and 26%, respectively.
In addition, the researcher observed that 58% of women delegate the management of the family’s financial affairs to their significant other. Women also tend to pay more for non-durable goods, such as baby clothes or groceries.
Risks of financial violence
Now comes the problem of financial abuse by one spouse at the expense of the other, that is, an abuse of economic power that limits the well-being of the other. “It is a taboo subject. But we know that when there is physical violence, there is often economic violence first,” said the researcher.
Considering that advisers can have a decisive impact on the financial life of clients, they can be sensitive to the signs of abuse, including the following identified by Hélène Belleau:
- One spouse ridicules the other’s contribution to the family income.
- One spouse saves while the other puts his career on hold to take care of the children, especially in the case of joint convictions without a cohabitation contract.
- All the money is sent overseas to support his family. “We know that many immigrant families send a lot of money abroad to support the family. If all the income of one goes to help the family, it would be interesting to know for which family and if they agree, because it can limit access to the money of the person who has the share of the salary”, explained Hélène Belleau.
- A spouse forces the other in a project against their will or without their consent. “Here we have sexually transmitted debts, that is to say those that we contracted in love, in pleasure, but that we returned in the shame of having had. It happens when one of the spouses supports the other for a project for which it was not disagree, but do it for love,” the speaker illustrated.
- After both spouses reported an economic injustice in their marriage, one voluntarily allowed it to continue.
Actions to consider
What to do now when you have a sign of abuse or a temporary inequity persists to the detriment of one of the spouses? Here are suggestions from the researcher and other panel members on the issue.
- Encourage both spouses to maintain financial autonomy. This means that everyone must deposit their payment into a personal account. However, according to the INRS study, 28% of couples deposit in a joint account.
- Consider the domestic economy in the broadest sense. For example, they agree that the time invested by one spouse in taking care of the children has value for the whole family, since it allows the other spouse to focus on his career.
- Involve both spouses in financial decisions and/or meet with them separately. It may be easier to raise individually with a client the sensitive issues of the danger of delegating financial affairs to the husband, the risk of increased longevity for women, the financial risks in case of a breakup.
- If one or the other spouse loses interest in financial affairs, the advisor should ask for their feedback, for example saying this in a private call, according to Fabien Major, financial planner and investment advisor for Assante Capital Management: “This is your family, I want to hear from you.”
- Make sure that both spouses know what happens in the event of a breakup (of the house, the cottage, investments, etc.) To do this, the differences between tax law and private law must be clearly explained, including the ‘effects of marriage. and coexistence.
- Be sure to follow when a couple is advised to sign a cohabitation agreement, because less than 5% of common couples sign such an agreement. Indeed, this type of contract often forces couples to consider breaking up and this dissonance can sometimes prevent them from taking action.
According to Fabien Major, it is necessary to present this type of contract rather as a test of love, as a couple’s project to consolidate it. “If a cohabitation agreement would be a solution and we procrastinate, we should always bring it back to the agenda. “I know that in your goals you said you want to fix this. I made you a little schedule and here are the steps to get there. I only have a notary colleague who would be ready to take care of your file “. It is our role sometimes to push a little well, because it is something that can affect our future experience,” he said.
- Hélène Belleau also talks about the importance of offering clients other options than the cohabitation contract, such as marriage. This is not only perceived as a test of love, but often an act that can be relatively economical. “Organize your finances in a different way while waiting to make your cohabitation contract. It gives hope that the project will come true, but it can limit the damage a little,” he said.
- To reorganize financial affairs, the couple can plan retirement savings differently by treating them as a joint expense in the daily budget. Spouses can also review the method of managing daily expenses according to income, for example, ensuring that each has a minimum discretionary income that belongs to him and that will not be used to pay family expenses.
- The relationship with the advisor must be based on trust and the absence of judgment, emphasized Hélène Marquis, regional director, tax and wealth planning, CIBC Private Wealth: “Something important for an advisor is to include a third party in the conversation, for example. , If you have a financial planner in your team who only makes financial or professional plans in your organization like me that you can present to the client. Often, in discussions that are a little more advanced, because the person is a third party, there are confidences that they don’t need to tell others,” he explained.
To improve the expert’s active listening and the client’s sense of being understood, it may be a good idea to have someone take notes for them, he says.