Bob Eubanks, Hubris and The Newlywed Game
Retirement expert Ben Rizzuto shares why families should not make assumptions, and instead make sure the right questions are being asked about financial wants and needs.
How well do you know your spouse?
Don’t worry I’m not trying to cause any marital issues with this question, although this could be the year for it.
TV game show host Bob Eubanks used to ask contestants this question on “The Newlywed Game,” which led to some hilariously awkward exchanges.
Knowing your spouse is, of course, important; and from a financial standpoint, knowing their financial wants and needs plays into how you plan for the future, something we aim to help advisors guide their clients as we consult on strategies for wealth transfer through Janus Henderson LabsTM. But the specifics of those financial wants and needs and how will they affect wealth transfer planning matter. Do you really know what you don’t know?
We all believe that no one knows us better than our spouse, our kids or our family members. My wife knows me better than someone off the street, but do we really know each other or do we misjudge our understanding of each other.
To test this, a recent study asked couples who had been together on average 10 years, 58% of whom were married, to play the roles of Responder and Predictor.
The Responder read 20 statements and reported how much he or she agreed with each one on a scale ranging from minus 3 (strongly disagree) to 3 (strongly agree). Statements included, “I would like to spend a year in London or Paris” and “Our family is too heavily in debt today.”
The Predictor then guessed how his or her partner would respond to each statement. Along with that they predicted how many of the statements he or she guessed correctly.
At this point stop and think about those questions.
How would your significant other answer? How accurate would you be?
In the experiment, Predictors believed they guessed an average of 13 items out of 20 exactly correctly. They actually guessed only five, on average, correctly.1
The problem here isn’t incompetence, it’s actually hubris. Humans tend to overestimate their understanding of each other and their surroundings. Similar results occur in other areas where people believe they are experts. We consistently believe we know more than we actually do.
The reason this is an issue is because families may believe they know each other well, they may think “I know exactly what Mom and Dad would have wanted to do with this money” or “I know that my oldest son would want to be the executor of our will.”
That may be true but the results above should at least make us wonder and it highlights how important sitting down as a family is in the financial planning and wealth transfer process.
It also highlights the central role a financial advisor can have in getting families together and then guiding them through these questions and ideas. It might be making sure parents discuss next steps with their children. It could go as far as getting Mom, Dad and the kids together for a family financial meeting to discuss the will, financial values and parents’ wishes after death.
Based on the data, families aren’t doing this.
- 44% of Americans see personal finance as the most challenging topic to discuss with others.2
- Then we overestimate our understanding of each other.
- This then leads to the fact that 70% of wealth transfers fail, largely due to a lack of communication or trust.3
Will you be the one they continue to trust when the time comes? So reach out to your clients. Help them through the process. The stakes are much higher than the questions Bob Eubanks used to ask couples on The Newlywed Game.
3Institute for Preparing Heirs
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