Women whose spouses control the finances may be putting themselves, their families at risk

Over 40 years of marriage, one of Stacy Francis’ clients took a back seat to her husband when it came to the family’s investments and finances.

In fact, she was given a strict budget she felt didn’t provide enough money to cover expenses for their life in New York with their two children. Her husband took delight in her struggles, said Ms. Francis, president and CEO of financial planning firm Francis Financial.

“She thought they were destitute because she was given so little to live on,” Ms. Francis said. “That was his way of controlling her.”

Later, when her client got divorced, she learned the couple had more than $10 million in investments.

Even though she took steps to stand up for herself by getting out of the marriage, financial autonomy is still a long way off for the client. She had worked with Ms. Francis on an hourly basis through the divorce but, against Ms. Francis’ counsel, decided to continue to rely on her husband, who was himself a financial planner, for financial advice.

“Unfortunately, it’s still going to take time for her to have confidence in herself to make these [financial] decisions,” Ms. Francis said.

A generation has passed since Betty Friedan and Gloria Steinem led a feminist movement to give women more power in society, but many women are still second-class citizens when it comes to financial planning. There are several reasons — some practical, others cultural — why women allow their spouses to steer the financial ship. But advisers warn that women who defer to men when it comes to finances may be putting themselves and their families at risk.

A UBS poll of 3,652 women around the world found 58% defer long-term financial decisions to their spouses or ex-spouses. Participants included 2,241 married women with at least $1 million in investible assets and 1,401 who were divorced or widowed.

Among the women surveyed in the United States, 54% said their spouse takes the lead in handling the family’s finances beyond paying bills. The women did not participate in long-term financial planning, investing or health-care decisions.

“It was startling to find out that most of the women that we talked to had little or no involvement with those decisions,” said Jane Schwartzberg, head of strategic client segments at UBS. “There is such a high cost to women not being involved.”

‘Starting at ground zero’

“The majority of the women who come to us don’t have a clear understanding of the finances of their marriage,” said Ms. Francis, whose firm specializes in women going through transitions such as divorce or the death of a spouse. “They’re starting at ground zero when there’s chaos and many moving parts in their life. It’s the worst time to try to understand your finances.”

Karen Van Voorhis, director of financial planning at Daniel J. Galli & Associates, had a client in her 40s whose husband died in March. While she was grieving, she had to tackle the family’s taxes.

“She had no idea whether he filed taxes,” Ms. Van Voorhis said.

Her husband had managed all of the household assets, including their retirement accounts. She scoured TurboTax and paper files without finding evidence of a tax filing. Ms. Van Voorhis’ firm helped her hire a CPA, who petitioned the IRS on her behalf.

“It took weeks to get it straightened out, and that was a shame,” Ms. Van Voorhis said. “It was such a distraction. It’s really difficult for a surviving spouse to inventory everything.”

Low confidence

UBS’ survey found women step aside when it comes to financial planning because they think their partner knows more about it, they’re not interested in planning and investing, or they divvied up household responsibilities, and financial planning fell to the husband.

In addition, there is a strong cultural dimension. Women are taught little about money when they are growing up, and men have traditionally taken the lead in handling family finances.

“Gender roles run deep,” Ms. Schwartzberg said.

That current continues to course through the millennial generation. The UBS survey showed that 59% of women ages 20 to 34 let their husbands take the lead on financial management, compared with 55% of women over 50.

Being out of the loop on family finances doesn’t break down along education lines, either. Women with advanced degrees also tend to be left out.

Joe Wride, owner of Crafted Finance, had a client who had a law degree but wasn’t kept apprised of the family’s daily cash flow by her husband. She was 60 and they had two children in college when she filed for divorce. The woman, originally from Brazil, found out she was not as close to retirement as she had hoped.

“She was unaware of how much wealth she had and whether she could retire soon or pay her monthly bills,” Mr. Wride said.

He worked with her to establish a household budget and project longer-term needs. They determined she had to go back to school and back to work. Her retirement was moved to 70.

No matter what a woman’s background may be, the challenge of catching up on family finances during a traumatic life transition is daunting. When women come to financial professionals for help sorting out their financial situation, the process starts with the basics of determining where money is located.

That first step, though, requires turning on a computer and facing hard numbers, which was difficult for a client of Marielle Schurig, a UBS vice president of wealth management. The client, who was going through a divorce, was terrified by the prospect of what she might find once she started looking into the couple’s finances.

“She was frozen,” Ms. Schurig said. “She was scared about the numbers she would see.”

All or nothing at all

Ashley Coake, owner of Cultivate Financial Planning, said female clients in dire financial circumstances following a divorce or death of a spouse tend to do too little — or too much — in response.

“Either they’re completely immobilized out of fear and they don’t act at all, or they make a really quick, bad decision,” Ms. Coake said. “In both cases, had they been in on the planning all along, things would have been very smooth.”

Financial professionals themselves share some of the blame for women being out of touch on family finances, several advisers said. One of the problems is that when couples come to an adviser, husbands are often allowed to dominate the conversation about financial planning. Sometimes advisers will meet with the husband without the wife being present.

“The onus is on the financial adviser to include the wife as a core contributor to the financial planning process so that each has an equal voice,” said Vance Barse, wealth strategist at Manning Wealth Management.

Advisers also can make the mistake of focusing too much on beating the market, a goal that can turn off women.

“Our industry has been completely, completely complicit in making this about returns and jargon and keeping the emotion out of the financial planning conversation,” Ms. Schwartzberg said. “In fact, financial planning should be all about who and what a person cares about.”

‘Meaning behind the numbers’

That’s the approach that Lisa Kirchenbauer, president of Omega Wealth Management, takes to get women enthusiastic about long-term financial projections.

“When we do life planning, it starts to put meaning behind the numbers,” Ms. Kirchenbauer said. “Women start to get quite engaged because it means more than focusing on: ‘Are we going to get a 6% return or an 8% return?’”

But the journey to autonomy in financial decisions can take time when women start from way behind after a long marriage in which they didn’t pay attention to financial planning.

“It’s a long-term educational road women have to be on in order to be able to take back control of their financial future,” said Vincent Fiorentino, a UBS adviser and owner of the Fiorentino Group.

The UBS survey indicates that 98% of divorced women and widows say they encourage other women to be more involved in their family finances.

“The message is out there from women who have been through this transition, but, unfortunately, the message doesn’t seem to be getting across,” said Jeff Scott, head of client and adviser insights at UBS.