In case you haven’t noticed, those thick-as-a-phone-book wedding magazines do not generally have headlines that shout, “What To Do About That Humongous Credit Card Debt He Didn’t Tell You About Until Last Week, That Weasel!” and “Six Easy Steps to Writing Your Pre-Nup!” True, these wedding tomes do talk about young couples’ money, but it’s usually in a context that’s far more Martha Stewart than Muriel Siebert: “Slash Your Wedding Budget by Making Favors Yourself!” To be fair, ModernBride.com does contain a few blurbs about financial planning for couples. But given that they’re sandwiched between such weighty topics as “Choosing the Right Wineglasses” and “Monogramming Your Linens” (“For a traditional look, choose a script font; for a super-fun twist, go for bold colors in a way-cool contrast!”), you can’t help but wonder how many readers actually read them, much less take them seriously.
Anybody who’s ever planned a wedding knows that an engaged couple is surrounded by people telling them what to do with their money–why they must opt for the horse-drawn carriage, the diamond-encrusted jewelry, the giant bouquets of rare Australian orchids. If financial planner Mary Ellen Baldwin had her way, however, starry-eyed brides and grooms would spend more time planning their long-term financial futures than picking out floral arrangements. By talking with soon-to-be-married and newlywed couples about such unromantic matters as taxes, insurance, budgeting, purchasing a home, and the time value of money, Baldwin hopes she can set them on the path to a very tangible kind of happily ever after. That’s the place where nobody has to fight about finances and there’s enough money to fund both partners’ dreams.
The Beginning of a Beautiful Friendship
Sounds great–except you can practically hear the business consultants shrieking about why the wedding-bell crowd is a crummy target clientele. First, most young couples aren’t rolling in investable assets; often their greatest assets are their college diplomas, the pursuit of which has also put them into enormous debt. Many don’t have the resources to pay for a full-service financial planning relationship, and can only afford a few hourly engagements now and then. And most can’t be counted on to reel in moneybags-laden referrals, either.
Baldwin, 48, isn’t blind to these drawbacks. In fact, it is because of them that she hasn’t devoted her entire practice to young couples. “I think it would be impossible, short of doing this pro bono, to have a large clientele of newlyweds,” says the Melbourne, Florida-based planner. A significant percentage of her clientele consists of retirees and small-business owners with an average net worth of $1 million and a minimum of $500,000 in investable assets, and these clients pay a flat annual retainer fee equal to about 1% of assets under management.
Yet there are reasons Baldwin makes an effort to make time for the lovebirds. For one thing, she likes them–the couples are young and energetic, not to mention the fact that they’re more likely to share her own hobbies of roller-blading, scuba diving, and kayaking than are her retiree clients. In addition, working with engaged or newlywed couples is often a great way to strengthen relationships with current clients. “A lot of times I’ve done a good job for Mom and Dad, and they say, ‘Oh, by the way, Pam’s thinking about getting married. Will you see her on an hourly basis?’” Whether or not Pam turns out to be a long-term client, the fact that Baldwin now knows the daughter personally provides her with another brick in the foundation of her relationship with the parents.
But perhaps the best reason for working with engaged and newlywed couples is the opportunity to make a significant difference, and one that is generally disproportional to the time and effort put forth. Just as a tiny change in the angle at which the baseball leaves the bat can mean the difference between a pop-up and a home run, so, too, a slight change in the money habits a young couple learns early on can have a significant effect years down the road. “You can make a huge difference in their world by talking to them about charge cards, and the time value of money, and investing for retirement, and postponing gratification, and communicating with each other about finances,” says Baldwin. “In these kinds of cases, I’m not sure that frequency [of client meetings] is relative to the success rate.” After every meeting, she gives them what she calls the “lifeline.” “Here’s my card,” Baldwin tells them. “If you need me, I’m here.”
Even the fact that she can only feasibly see the couples by charging hourly, a payment structure she generally dislikes, isn’t enough to put her off. “As a rule, I don’t really like working on an hourly basis, because it’s stressful,” she says. “I don’t want to overlook anything, and when people are paying you hourly, you know they’re watching the clock and saying, ‘Well, I don’t want to take the time to tell her this and this,’ and often, the important things only come out in conversation.” For newlyweds, however, an appointment paid for by the hour is often the only structure that makes sense; it’s both affordable enough for the couples while adequately compensating Baldwin for her time.
As an example of her place in these couples’ lives, Baldwin tells a story. The young man had had it. His new bride was racking up debt at a staggering rate, and though he didn’t begrudge her goal–earning a Ph.D.–he did begrudge her the speed with which the bills were piling up. Why wasn’t she holding down a job and studying part-time at night? Why couldn’t she skip a semester, just to give them time to pay off some of the loans? Six percent interest isn’t horrible, but on $50,000? Come on! The numbers mounted, and finally he snapped. He packed his bags and left.
When the young bride called Baldwin the next day, the planner invited the couple into the office for a meeting. She didn’t mince words: “Postpone the Ph.D.!”
“I told them, ‘Don’t give up on the goal of the Ph.D., but don’t overwhelm yourselves with debt at this point in your lives,’” she recalls. The advice might have been different for a different couple, she adds, since another husband might not have been as freaked out by the debt or had a higher-paying job to offset it; another wife might have needed the doctorate right away in order to land a lucrative position or had the degree paid for by a corporation. “But in this case, his eyes were glazing over [in the face of all the debt], and he was saying, ‘I can’t do this.’”
As this story illustrates, advising newlyweds on financial matters can often be as much or more about life choices than expense ratios and fund selection. Should we get a graduate degree now or later? It depends, and here’s the spreadsheet explaining why. When should we buy a house? That depends, too, particularly if you’re expecting to be transferred. Should we buy a Porsche? No. (No spreadsheet needed.) Should we finish our college degrees? Yes! On this last one, Baldwin is crystal clear: “Invest in yourselves!” she cries. “That $2,000 put toward your tuition bill is far more valuable than hiding it in an IRA.”