Enfranchise a Couple with Capital Preferences

Most advisers manage assets held by couples rather than individuals. Too often, however, advisers do a poor job of incorporating both partners’ preferences in the financial planning process.

This unacceptable trend of neglecting one partner is perhaps demonstrated best in the industry’s current approach to risk profiling couples. Today, 20% of advisers only risk profile one person in the couple. In addition, 53% of advisers risk profile the partners jointly, where both partners weigh in on a single risk profile. This approach is highly prone to the partners biasing each other’s answers and advisor bias, potentially creating situations where one partner (often the woman) is overlooked, either wittingly or unwittingly.

To enfranchise a couple in the advice process, you must first understand each partner in a couple's individual risk preferences.

How do I use Capital Preferences to enfranchise couples?

Our gamified Risk Activity is designed to individually capture each partner's preferences and then combine them into a holistic household view of their risk preferences and portfolio comfort match.

From our research, 60% of couples have a meaningfully difference in risk profiles. These couples are six times as likely to decrease AUM compared to couples with a similar risk profile. We speculate that couples with larger risk gaps have at least one partner who doesn’t feel comfortable with the way their assets are currently invested, which feeds through to intent to move AUM.

This is where you as their financial adviser can efficiently engage, understand, and enfranchise each partner in the advice process. With us, you can risk profile each partner individually to create shared, memorable advice moments with the couple. These moments are the key to building strong relationships with the second partner.

• Creating a household - To risk-profile each partner of a couple individually and combine their preferences into one suitable plan for both partners, you must first create a household.

For additional assistance, see our articles on How to Create a Household and How to Combine Individual Clients into a Household.

• Household discovery meeting - In the discovery meeting, our advisers cover the standard topics around the household's personal and financial background, goals and objectives, and taxes. However, when it comes to risk they lean on our Investment Meetings.

  With as few as five clicks, you can gain a comprehensive understanding of a household's comfort with risk and launch into a personalized Investment Meeting. Our Investment Meeting provides education about risk, explores the household's decision-making processes, and aligns their risk preferences with financial goals—all with the aim of helping them achieve their desired outcomes.

In the meeting, we combine each partner’s individual preferences into a household view and match the couple to the most suitable portfolio for both partners.

This way, you and the couple can have a collective conversation about how to best accommodate both partners’ preferences to achieve their mutual goals. These are the active ingredients in re-thinking risk profiling to create memorable (and equitable) advice moments for couples.

In addition, our research has found that advisers delivering a strong risk readout to couples have a 40-point NPS lift, 23% greater intent to grow AUM, and 35% lift in value for fees paid than those delivering weak risk readouts.

We encourage you to enfranchise both partners in the advice process and increase client trust, loyalty and assets in the process. 

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If not, please feel free to reach out to us at customer-support@capitalpreferences.com