Divorce marked to market

March 16, 2009

MARKETS-GLOBAL /– Margaret Doyle is a Reuters columnist. The opinions expressed are her own –

The Myerson divorce case in Britain makes compelling reading, as all rich bust-ups do. Regardless of whether the judges make Ingrid Myerson hand back 3.2 million pounds of her 11.1 million pound payout to compensate for the decline in her ex-husband’s shares, she is a lucky woman.

Thanks to her divorce last year from fund manager Bryan who, as one half of Active Value Advisers, was the scourge of corporate UK, she is independently wealthy. Had the marriage survived, she would probably be — like him — worthless.

The lesson from the Myerson divorce is that wives who cede control of the family finances to their rich husbands will have to accept that marriage may be for poorer as well as for richer. If they do not want to risk their family’s wealth being wiped out, they will have to take an interest in it.

is a sculptor, and presumably claims as little financial nous as most artists. But this model of marriage — where one party, usually the husband, makes the money and all the financial decisions — remains surprisingly common among the rich. It is easy to see why.

Over the past few decades, pay for senior executives and financiers has rocketed. And the demands on them have soared too: in terms of hours, overseas postings, travel and general stress. So it made sense for the other party, usually the wife, to become a “trailing spouse” whose job it was to support her high-earning husband and keep the family show — and the second homes and dogs and ponies — on the road.

With such a lifestyle and largely absent husbands, it was hard for these wives to maintain any sort of career at the same time. And with millions being made, that trade-off seemed to make financial sense. Why would a wife bother to work when she was paid buttons compared with her husband’s lavish pay and perks? And why should she get involved in the family finances when her financier husband was doing such a good job at it?

MARITAL UNDERSTANDINGS

But these marital understandings are now being called into question. Because so many banking bonuses were paid in stock, there are few financiers whose wealth has not been hammered by the decline in financial stocks over the past year. Moreover, with governments taking stakes in banks across the world, bonuses are out of the question for the next few years.

Worse, many financiers took on a lot of debt, buying fancy houses on the never-never and using their stock and expected pay as collateral. But the value of property has been plummeting too. Now such families are not just worthless: they are worth less than nothing. And many are unable even to pay the interest on their home loans.

Working class women used to keep cash in a jar for a rainy day — what some called “running away money”. They understood the value of having some financial independence. But another group of women, who should have known better, do not.

This well-educated lot, often with MBAs, seem to have ignored what they learned in investment 101: don’t put all your eggs in one basket. Instead, they are finding that their family’s entire lifestyle: home(s), holidays and schools are all an unhedged bet on the future of the finance industry. Far wiser to have reined in their husbands’ borrowing, and perhaps to have kept the job. They are now learning the lesson the hard way.

7 comments

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To comment on what you are saying and probably ranting about things completely unrelated but that made me think of this:
It’s not simply rich women who let their husbands run the finances in the family and who take no interest in holding a job for the sake of the children.
It’s a very middle-class sort of thing to do still in many societies, it seems to me.
Of course, if a family is dirt poor, the wives and the children will chip in any way they can but even in the face of unrelenting poverty, it’s a fact that men still want to brag that their wives don’t have to work because they are well off enough to have a sole male bread winner.

Posted by Bart | Report as abusive

Human, since the old known story, is patriarch by nature! however, civilization pushes one way forward. Therefore, the drudge of works is equally shared to each member of the family, each has their respective role and responsibility. Beyond this equal participation is selfishness or irresponsibility. Any kind of -ism coming up these days marks this prominent and deviant nature of civilization. So it comes to surface the imminent discrepancy of the contemporary social life due to divorce, which is the serious lesions and endemic cancers of the very cellular site of the human life.

Posted by Meloky | Report as abusive

Rich or poor, male or female, doesn’t every person have a responsibility or good sense to save for a rainy day? If you or your spouse (male or female) made heaps, why didn’t you save enough? Whether you earn a lot or a little, you have to live within your means. The sunny days do end, and there are always rainy ones!

Lastly, I am truly sick of reading about wives or ex-wives of rich men griping. You made your bed – go sleep in it. No one forced you to do anything. And even if you divorce, this person was obviously someone important enough once you wanted to live the rest of your life with. Carry that in your heart, so your children will have some faith and hope for the future. Money is important but it’s not everything. Now go live and let live. This is life, stuff happens.

Posted by Clarita | Report as abusive

I was a Wall Street wife for a while and I agree with the comments.

The women you mention relinquished control over many aspects of their life because they couldn’t argue with the size of the remuneration their husband received. This annual lottery win by their husband disempowered women in the relationship in many ways. If a husband had to travel, work, text during school plays or miss anniversaries, his pay ensured that the relationship, which probably started as a meeting of equals (equal education, pay and dreams till his pay hit the stratosphere and she started parenting), ended up with a voiceless woman.

So maybe with the enforced crash landing of so many masters of the universe to just hopefully still-working stiffs might mean a rebalancing of roles in the relationship! Every cloud does have a silver lining, after all!

Posted by Wendy | Report as abusive

I will ask this…….Why is it that when a wife who has the better job and advanced masters degree education, will have to pay alimony to an uneducated (high school diploma and some undergraduate courses) husband who cheats on her? Why should she have to pay for his infidelity?

Posted by Gloria | Report as abusive

Brad you are highly misguided. My wife stays at home and looks after our child as she provides care which is infinately better than any paid for care will ever be able to provide for our child. We agreed on this decision after we had visited a number of nurseries. Just as I suspect is the case for many other families in which this relationship is in effect.
Where it has gotten out of hand is where women staying at home to raise children still employ nannies, cleaners and other household staff. This is up to the stupidity of the husband to sort out and is not something to openly boast about.

Posted by nick | Report as abusive

My apologies. My comment should start with the name Bart and not Brad.

Posted by nick | Report as abusive