'Financial planning for polyamorous relationships is not any different'

It seems that there are more people in relationships with multiple people than I would have imagined. I started writing about it on social media and got referrals because it seems that we have left out this whole community of people up to now.

Historically, our industry has not paid much attention to those in polyamorous relationships. The legal system and financial services have been primarily built on the foundation of two people forming a household.

While there has been some flexibility in recent years, polyamorous individuals still face challenges in finding the right advice and creating a financial plan that truly reflects their relationship dynamics.

You might have also encountered these issues with clients who have moved to the UK from elsewhere where marriage to more than one person is legally recognised.

Have you ever been in a meeting with a potential client, expecting to meet with one person, only to discover they have a partner or spouse who needs assistance? It's a great feeling when you have effortlessly expanded your reach. 

The only difference is that you might need your thinking cap.

Polyamorous individuals engage consensually in romantic or sexual connections with multiple partners, embracing ethical non-monogamy rather than infidelity.

I don’t think we need to be worried about what our clients get up to in the bedroom, but if there are legal and financial ties to various then we need to make sure we consider the big picture.

I have written this to promote the awareness of diverse client needs. Just like any couple, polyamorous relationships come in a variety of shapes and sizes. Some may find their finances intricately woven together, while others may keep them somewhat separate.

Financial advisers cannot change products and providers' rules, but we can think outside of the box to help your client. Here are three examples.

1. Life insurance: for everyone in the relationship

In a polyamorous relationship, you could opt for recommending separate insurance policies for each partner or child who could be financially impacted.

Alternatively, you might consider a single policy and divide the benefits among their partners or children using a trust form. 

2. Safeguarding lifestyles: protecting incomes

Multiple adults in one household means multiple incomes can offer added security, but unanticipated changes in income can still pose challenges.

There are various methods for quantifying protection insurance recommendations. You can’t go far wrong if you start with a blank canvas and build a picture of what it looks like without each earner’s income coming in.

3. Planning for a multi-dimensional retirement

Planning for retirement can be a little more complicated. It does not help us that most cash flow models can only accommodate two people. Think outside the box: you could look at pooling everybody’s income and expenditure together or look at the figures for each individual separately.

If you have two people who want to retire on similar dates and have similar birthdays you could add their income and assets together (although you will have to manually account for the extra tax allowances they will have).  

Consider the scenario of Tom, living with partners Jude and Becky, all age 40. Tom, a higher-rate taxpayer, earns substantially more than Jude and Becky who pay basic-rate tax.

In the event of Tom's death, Jude and Becky would like to stay together. Jude and Becky, manage the household due to Tom's demanding job. They all anticipate being together through retirement. Tom's retirement may come later because he enjoys work.

Planning in polyamorous relationships is no different to planning for everyone else, because it is about acknowledging individual needs.

To plan their retirement, we need to discuss plans and use a cash flow model to make sure that they have enough savings, nothing new there.

Tom’s financial circumstances can be considered separately if we calculate the income he needs to bring into the household. He pays 50 per cent of the household expenditure now, so let’s assume that continues.

Jude and Becky can have their own separate model so simplify your calculations. 

Protect Tom’s income the same as in any other client, by looking at the household income need and what other income is available if he cannot work. For life insurance, split the benefit between Jude and Becky using a trust form.

In conclusion, financial planning in polyamorous relationships is no different to planning for everyone else, because it is about acknowledging individual needs and providing tailored solutions.

The only difference is that you might need your thinking cap.

But, adapting to these changes and welcoming diverse clients creates new opportunities while ensuring everyone's financial wellbeing is properly cared for.

Jamie Lowe is a financial planner at True Self Wealth