I’m not the average bride. As a licensed financial professional who has spent her career in the industry and the daughter of a CPA/financial advisor who has been in the industry nearly four decades, I have been raised to believe in the critical role financial advisors play in retirement, education and legacy planning. However, getting engaged has taught me there is another area of wealth management where advisors can demonstrate their value – wedding planning.
As of 2016, the national average cost of a wedding hit $35,329, a 7.6 percent increase over the prior year.1 Wedding costs are growing at a rate higher than that of college education and inflation combined. Even more troubling is that couples tend to underestimate how much they’ll spend on their wedding by about 40 percent.2 Financial challenges of planning a wedding such as these present a perfect opportunity for advisors to deepen their relationships with existing clients and start building relationships with the next generation of clients.
2016 National Average Budget Spend
Think of the wedding budget as an asset allocation model (yes, really). Most advisors don’t have ample experience in wedding planning, so think about it in terms of something you do. Just as investment plans are personalized to individual needs and objectives, so is a wedding budget. Think of bigger categories of expenses (e.g., venue, catering, professional services, attire, etc.) as asset classes filled with relevant investment vehicles (e.g., professional services may include a photographer, band, florist, officiant, etc.). Based on different objectives, assets may be diversified differently from one couple to the next. A tech-savvy couple may choose to do online RSVPs to allocate more money to showing a video at the reception. And just like a financial plan, sometimes the wedding budget requires review and rebalancing. For example, if a music-loving couple goes over budget on the reception band, it may make sense for them to scale back in other areas to keep them on track toward their goal. Simple tip, effective results.
Help your clients decide what really matters to them and plan accordingly. Is saving for a down payment on a house more important to the couple than having a big wedding? What about paying off student loan debt? The wedding is the first of many financial planning opportunities a couple may face, which is why it’s important that the wedding budget reflects the couple’s own financial priorities and concerns, as well as that of their families. Facilitate a discussion where the couple can discuss their thoughts and beliefs around money.
Prep them for the other financial conversations they’ll need to have. Forty-six percent of couples’ parents pay for most or all of the wedding, while 44 percent of couples pay for it themselves.2 Some families choose to give the couple a set dollar amount for them to use on whatever they’d like, while others choose to pay for specific things. Figuring out who is paying for what and how much they’re willing to spend is probably the most uncomfortable part of wedding planning, but whether you’re working with the engaged couple or their families, stress the importance of getting difficult conversations out of the way early and having a clear budget to work with to avoid misunderstandings and arguments later on.
Show them that cost does not necessarily equal value. Wedding decisions don’t just have a financial cost – they also have emotional value, and the two may or may not be connected. For example, a workaholic couple may try to reduce stress (emotional value) by hiring a wedding planner (higher cost) or scaling back the celebrations (lower cost). Financial plans aren’t based solely on the amount of capital to be invested; goals and time horizons are perhaps even more important. The same is true for wedding planning.
Remind them to be mindful of the expenses others are incurring on their behalf. This is especially true for members of their wedding party. On average, a bridesmaid spends around $1,200 on a wedding, but that number can easily spike based on the price of the bridesmaid dress, alterations, accessories, travel, hair, makeup, bridal showers, bachelorette party, etc.3 Hosting bachelor/bachelorette parties or even the wedding in an exotic location increases the cost of attendance and likely limits the number of attendees. The engaged couple or their families may want to take on additional expenses to ease the burden on others, so it’s important to include these in the wedding budget to avoid being among the 47 percent of couples that report spending more on their wedding than they planned.1
Give your clients the wedding gift of sound financial advice.
As financial advisor, you are in the perfect position to help engaged couples and/or their families put a comprehensive financial plan in place for the big day while considering everyone’s financial future beyond the wedding and the challenges that may lie ahead.
And remember: building trust with to-be-weds now likely means that you’ll be the first person they’ll call when it’s time to set up an education plan for their first child.
Shelley Schexnayder is the senior communications advisor at 1st Global. In this role, she works to connect financial advisors and wealth management assistants with information that will aid them in building thriving and efficient enterprises.
1st Global is headquartered at 12750 Merit Drive, Suite 1200 in Dallas, Texas 75251; 214-294-5000. Additional information about 1st Global is available via the Internet at www.1stGlobal.com.
Securities offered through 1st Global Capital Corp. Member FINRA, SIPC. Investment advisory services offered through 1st Global Advisors, Inc.
Neither asset allocation nor diversification assures a profit or protects against a loss in declining markets.
2 2017 Newlywed Report, WeddingWire.
3 This Is the Actual Cost of Being a Bridesmaid, WeddingWire.