— Margaret Doyle is a Reuters columnist. The opinions expressed are her own —
By Margaret Doyle
LONDON, March 16 (Reuters) - 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.
Ingrid Myerson 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?
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.
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