Financial infidelity is one of the more complicated issues that financial planners face when meeting with couples. The hurt and betrayal that often comes up in the planning room is made even more complicated by the different perceptions that planners have about it.
Therefore, here is a quick overview. Financial infidelity does not have any real set definition, but Brad Klontz, Kristy Archuleta and Anthony Canaly broadly defined it in Financial Therapy: Theory, Research, and Practice as, “purposeful financial deceit between two or more individuals wherein, there is a stated or unstated belief in mutual honest communication around financial matters.”
Financial infidelity can include financial cheating including, “hiding purchases from spouses, having secret credit cards or keeping secret personal bank accounts,” according to a 2018 Journal of Financial Therapy article titled, “Financial Infidelity in Couple Relationships.”
Understanding your beliefs about what is and is not financial infidelity will have a huge impact on how you handle it when it comes up and how much your clients will trust your help. So let’s dig into this a bit.
It is important not to minimize “small” incidents of financial infidelity as it can reflect larger relationship problems. It may be more about how individuals assert their needs, manage conflict and trust each other more than the actual money.
Rates of financial infidelity vary by definition, but the 2018 Journal of Financial Therapy article referenced above found that 27 percent of individuals admitted to keeping a financial secret from their partner. The effects of the financial infidelity can vary from financial planning problems, interest on hidden debt and postponing major life events, to decreased marital satisfaction, loss of trust, depression and defamation of character.
Steps to Address Financial Infidelity
What can you do if you discover financial infidelity? Here are some steps that are likely to help you as you help your clients move forward:
1.) Ground yourself. Notice your own feelings with this issue. Are you angry? Sad? Scared? We all bring ourselves into our work with clients. It is important to process your own feelings and thoughts so that you can be grounded when you interact with your client.
2.) Be direct, there is no point in delaying. If it does not come out in session, it will later. So do not postpone a conversation because it is uncomfortable.
3.) Try to be open-minded. It is best if you can look at the reasons why this happened without judging the person. The more you know about the clients’ emotions and thoughts, the better you are going to be at addressing their needs and helping ensure that it does not happen in the future.
4.) Normalize and validate. Both partners are likely feeling hurt and need to know their feelings are normal and okay to have. Try to empathize with both partners’ experiences, while holding accountability and not taking sides.
5.) Problem solve. This is an opportunity for you to instill hope. Most tangibly, you will help them come up with a plan, but you need to know everything to help them. This will not only make them feel more hopeful about their work with you, but also help them see their role of disclosing as part of the healing. Remember everyone (at some level) wants to be the “good guy” so let them help you by coming clean.
6.) Tell them to do their research before disclosing to their partner. The partner who has not disclosed is probably fearful of the reaction. It is crucial that you discuss and prepare them to approach the topic in a way that will not incite violence.
Financial infidelity does not look the same and does not come from the same motivations. It can come from addiction, abuse, an affair, fear, shame or pride. Your actions will not be one-size-fits-all but should reflect what your clients need from you. Doing your own research on how to handle these topics or by watching a replay of our webinar for the Financial Planning Association and Financial Therapy Association (which will be available soon), you can gain skills in approaching these situations.
This is a challenging topic, but as you address your own emotional reactions and learn to connect with clients in pain, you can effectively navigate this issue and others. Most importantly, you can and will provide your clients with support in a helpful way.
On a final note, remember that you do not have to do this alone. Financial infidelity is a complex issue that may provide the need for a couple counselor or marriage and family therapist. There is still a stigma against therapy in many places, so you can be an invaluable resource to your client by doing your own research and finding a mental health professional you trust near you that can serve as a referral source.
Editor’s note: The authors of this post explored this topic more in-depth in a Financial Planning Association and Financial Therapy Association webinar called: “Difficult Conversations 3: Couples Dealing with Financial Infidelity.” The other two parts of the three-part webinar series dealt with ambiguous loss from Alzheimer’s disease and financial enabling. All three webinars will be available on-demand for members in the fall of 2019.
Nathan Astle is currently pursuing a master’s in couple and family therapy from Kansas State University with a graduate certificate in Financial Therapy. He is currently researching the interplay of couple attachments, financial transparency, and money scripts on financial stress.
Megan McCoy, Ph.D., LMFT, is an adjunct faculty member at Kansas State University where she teaches courses for the financial therapy certificate program. Her research focuses on financial therapy and has been published in several journals including the Journal of Financial Therapy and the Journal of Financial Planning. She serves on the board of the Financial Therapy Association and is associate editor of book reviews and profiles for the Journal of Financial Therapy.