It would be great if money wasn’t an emotional issue, but we know that it is. At a deeper level, it’s about power and control, not just numbers and math. Abusers use financial abuse to gain power and control in an intimate partner relationship.
According to research by the Center For Financial Security, up to 99% of domestic violence victims experience economic or financial abuse, and 97% experience a form of economic control during an abusive relationship. In these cases, finances are often cited as the biggest barrier to leaving an abusive relationship.
However, 78% of Americans don’t recognize financial abuse as domestic violence. Let’s face it: When it comes to abuse, most people automatically think of verbal or physical abuse rather than abuse relating to money and finances. And it’s not a place we advisors want to go. It feels uncomfortable. But a recent call with a potential client resurfaced the importance of this for me, so I’d like to share that with you.
A Recent Call
Krista made a 15-minute introductory call. During our conversation, she shared that she was 62 years old, started collecting Social Security last year and was working part time. She felt it was about time that she learned more about money and started to take control of her financial future.
She had enrolled in a financial literacy class, but her husband found out about it and canceled her enrollment. As we spoke a bit more, she shared with me that last year her spouse had encouraged her to take Social Security early rather than delaying it, which would increase her benefit. She was concerned if claiming early was a good idea and looked to create an account on the SSA.gov website to seek more information. But her spouse “highly” discouraged her from doing so.
As a result, she didn’t get more education on when to take Social Security so she didn’t elect to have taxes taken out of her check. Consequently, she is now facing a $2,000 tax bill to the IRS, and she’s struggling to figure out how to pay it with her limited financial resources.
During this conversation, Krista told me that she needs more education about money because she doesn’t trust her spouse’s advice or the way he handles money. With some additional probing, I learned that her spouse limits her access to financial knowledge and accounts. She is concerned about her financial well-being and safety and considering divorce. But she hasn’t left because she doesn’t have a plan and faces a lot of financial uncertainty and unknowns regarding next steps.
Krista is a victim of financial abuse. I wouldn’t have known any of this if I had ended the conversation by simply suggesting she enroll in a financial literacy webinar.
What is Financial and Economic Abuse?
Financial abuse can be a subtle manipulative “wooing” process that wears us downs slowly so that we start to normalize these behaviors. Or it can be overt, demanding, intimating or a combination of all the above. It usually begins in the dating phase, and it unhooks us from our “gut brain” or intuition.
I’ve seen domestic financial abuse increasing and occurring with too many smart, educated women, even as women continue to earn more and advance in the workforce. I was one of these women, which is why I want to address this important topic. It’s not just the stay-at-home mom who is the victim.
At the time of this conversation, Krista was not a client. But having been financially controlled in my marriage, I knew it was important to probe further.
Economic Abuse
It isn’t uncommon for one partner to stay at home while the other partner works outside the home as the primary breadwinner. The working partner gives the stay-at-home partner an allowance and no access to funds for themselves. In its most straightforward form, economicabuse is when one person deprives another access to financial information, withholds access to money, or inhibits the ability of another to make money.
Financial Abuse
Other times, financial abuse can also be a partner dissipating finances for personal use or “coercion of debt,” which involves guilting their partner into agreeing to financial decisions they’re not comfortable with. For example, taking out a home equity line of credit (HELOC) on their home or co-signing on a car loan. Any erosion of the financial health of the partnership that depletes another’s access to resources in the long run is a form of this abuse. Controlling or depleting resources creates a financial dependency, which is a way to control a partner and keep them from leaving the relationship.
What to Listen For
Having a budget and a spending plan and knowing cashflow is awesome — but both parties need to agree and have this knowledge. If one partner is hiding purchases for fear of reprisal, can’t control their spending (retail, gambling etc.) or conceals the financial information, there’s a problem. Regardless of how much a couple earns, listen for the following during conversations with one or both parties:
“It’s just a budget.”
“I’m better with money.”
“I’m just trying to be responsible.”
“I make more, shouldn’t I have more?”
“I don’t know what we have.”
“I don’t have access to our accounts.”
“I don’t trust my spouse’s decisions with money.”
“My partner/spouse is very secretive about money.”
Unequal resources or unequal decision-making can be a sign of unequal financial control and financial abuse.
What to Ask
If you heard any of the above, depending on where the conversation then leads, and who the audience is, you could consider asking:
“How do you go about making financial decisions as a couple?”
“How do you handle joint and individual expenses?”
“Do you feel like an equal partner in financial decisions?”
“Do you have access to money or credit cards?”
“Are you concerned if he/she finds out you’re speaking with someone?”
“Are you concerned that your spouse may be accessing your computer or phone?”
“Do you feel safe?”
“Are you concerned for your safety (physical or emotional)?”
Yes, this is a delicate subject, and we need to tread lightly, as I did that day with Krista. So, you can preface any of these with, “Please excuse (or don’t be offended with) what I’m going to ask …”
Suggestions When Financial Abuse is Suspected
Depending on what was shared, any of the following may make sense as suggestions for your client. Most of these I shared with Krista that day:
Change passwords on email, phone and computer and add two-factor authentication whenever possible.
Open new bank accounts and have the bank mail sent elsewhere.
Keep important copies of documents at another location, such as with a friend or family member.
Don’t withdraw money from ATMs near where you live.
Consider IRS programs like Innocent Spouse Relief, Injured Spouse Relief, Separation of Liability Relief and Equitable Relief.
Contact Dress for Success for mentor and employment resources.
Start to make a plan: Have a safe word. Where can you go? Who can you call?
Get a “burner phone” to keep at another location or with a friend.
Locate the police department closest to your home and work.
Pack a simple bag to keep in your car, something unassuming with essentials. and a change of work and casual clothes.
Join a support group (Meetup, DivorceCare, 2nd Saturday workshops if divorce is indicated.)
Call 211 for services and programs in your state.
Find the domestic violence group in your county.
Contact the National Domestic Violence Hotline, 800-799-7233.
As advisors and fiduciaries, we have a duty of care to act in the best interest of our clients if we believe there is undue influence. I believe that we can choose to extend that to prospects, as well, if we feel comfortable.
Unfortunately, it’s usually the woman who is the less-monied partner in cases of financial abuse, but that’s not always the case. Just because your educated, high-earning female client seems “capable,” that doesn’t mean financial control or coercion isn’t being exercised. You just might need to dig a bit deeper and listen a bit more attentively.
Michelle Petrowski, CFP, CDFA, is founder and planner at Being in Abundance, a Financial Planning and Wealth Management firm and Being Mindful in Divorce. She previously served on the board of directors for the Financial Planning Association on Long Island and in the Greater Phoenix area, the Maricopa Association of Family Mediators and the Alisa’s Angels Foundation in Arizona. She is an advocate for the financial literacy for women and has volunteered for Savvy Ladies in New York and Fresh Start Women’s Foundation since 2013. You can reach her at Michelle@BeinginAbundance.com.
