04/20/2009 05:12 am ET | Updated May 25, 2011

Madoff with the Wife

This article could have been titled "Madoff with the Spouse" or "Madoff with the Partner." The title is not meant to be sexist. Just factual. The questions about Ruth Madoff remind me of the 70s. I don't mean the horrific markets from 1973 to 1974, down 45 percent. I mean Watergate.

What did she know? When did she know it?

A $65 billion fraud is massive. Many have been hurt. Victims are outraged. The authorities are struggling to identify conspirators and seize assets, like the $7 million yacht named "Bull."

Any thoughts on what to rename the boat?

There's also the $11 million house in Palm Beach. Will Florida's homestead laws, in an extraordinary perversion of justice, protect that residence? Remember OJ? The state's laws shielded his home from creditors. If they protect Madoff's Palm Beach estate the same way, we will scratch our heads in disbelief.

Is this right?

I'm not speculating whether Ruth Madoff knew about her husband's activities, whether her $45 million in municipal bonds or $17 million in additional cash should be seized by regulators. I will only say this. Sixty-five billion is a staggering sum for one person to raise by himself. It's enough money to pay college tuition for 1.3 million years at the most expensive universities in our nation.

Graduate school? No problem.

We know Madoff had help. We don't know the full extent. His confidantes probably knew about the scam for years. Did the family and feeder funds really trust the integrity of 12 percent returns, year in, year out? Wall Street never generates steady double-digit returns. There's a little problem called volatility. We're seeing it now, the market down 2 percent one day and up 3 percent the next. That's not the point. I'm not assigning blame to Ruth Madoff, the feeder funds, or anyone else for that matter. The courts can decide.

I'm exploring personal responsibility. In the wake of this horrific market, one truth is clear. And it's absolute. No one cares about our money the way we care. No one. That includes banks, money management firms, and financial advisers from the country clubs. As a consequence, I'm crossing into a no-comfort zone. Here's my question:

Should you let your spouse make all the money management decisions?

Ruth Madoff will plead ignorance, no doubt. What choice does she have? If she confesses prior knowledge of the Ponzi scheme, she's in deep trouble. Conviction as an accomplice, if there is any truth to all those Law & Order reruns, means Sing Sing or something else incomparably bad.


A $65 billion fraud is both spectacular and heinous. But there are issues closer to home. We hear "I don't know" all the time. In our world of commitment overload, couples divide and conquer. We fight for our jobs. We take kids to soccer. We volunteer. We care for our extended families. And there are only twenty-four hours in the day to get it all done. By necessity, we divvy up the tasks. We often turn financial control over to the spouse with more knowledge or inclination.

"You bring home the bacon. I'll take the kids to school."

Division of labor, when it comes to money, scares me. It's not safe, and I believe the Madoff scandal is a huge wake-up call. Consider the spouse's defense: "I'm an ostrich. I didn't know." Even if that's true -- and I'm not judging here -- total innocence doesn't matter. Ruth Madoff is spending time and money in the courts. There will always be guilt through association. Had she discovered the fraud years ago, she could have blown the whistle. But she didn't. And now, she's likely to share the one-word description following her husband everywhere in the press. "Disgraced."

Ponzi schemes won't touch most of us. We work hard. We're honest. We're smart enough, perhaps lucky enough, to avoid the Svengalis of finance. And our spouses are rock-solid legitimate. That's fine.

It doesn't matter.

We still need to pay attention. Do we know what to do if our spouse precedes us in death? Did he or she control all the money? Are we clueless?

The percentage of couples -- where one partner makes all financial decisions and the other knows nothing -- is probably small. I base this opinion on my years in wealth management. More often, one person knows a little. The other knows considerably more and takes primary responsibility for the money. These imbalances, I believe, are reasonable. It's the lack of interest masquerading as division of labor -- the soccer mom/hockey dad defense -- that bothers me.

No one cares about our money the way we care.

As a wealth adviser, I addressed variations in financial knowledge all the time. My novel, Top Producer, deals with these imbalances among couples. What happens when one spouse knows everything? And the other is an ostrich. And something goes wrong, very wrong. What are the consequences?

Are you uncomfortable?

The fix is easy. Switch jobs for a few days. Tell your spouse to buy the groceries, while you study the portfolio. Meet financial advisers, insurance people, and the attorney who drafted your will. This market may be the pits. But you can forget your embarrassment about "beginner's knowledge." Financial advisers will spend time with you because they're afraid of losing clients.

There's one other thing. If you do nothing else, keep some money in your own name. Ruth did.