Good financial investors do worry, especially about risk — all types of risk. Investors want to see investment returns but rarely ask about risk-adjusted returns, which are much more important. But, does a good financial advisor need to worry about a client who has a high probability of suffering a life-altering event over the next 25 years with an average decrease of 77% in their net worth? Yes, of course!
According to AAA, there is a 33% probability you will get divorced, compared to a mere 25% probability you will have a serious car accident in the next decade. (67% of second marriages fail, proving people don’t learn from their mistakes.) We would always advise clients to have car insurance, but should we advise them to also buy marriage insurance?
One insurance company is preparing to launch such a product. Obviously, we could never recommend it until the details are published, but do we have an obligation to protect our clients from divorce? We are designated worriers, not designated busy-bodies! We already do estate planning for the possibility of divorce, including pre-marital and post-marital financial counselling, and are very careful with account titles, but do we have the responsibility to recommend insurance for that type of risk, as we do for life insurance, auto insurance, and property insurance, etc.
I think we do, especially for younger female clients, but watch this space . . .