What Widows Should About Know About Financial Advisors

Experts recommend taking these steps to make the inevitable time of transition easier.


by Joanne Cleaver

Source: US News and World Report

Women tend to stick with their financial plans, and, it seems, stick with their financial planners, even after losing a spouse.

A survey of women, one set in their 40s, the other age 67 and older (baby boomers were not included), which was sponsored by Russell Investments, found that 78 percent of the younger women and 93 percent of the older women believed they would continue with their current financial advisors if they became widows.

This expectation tests the truism that the newly bereaved should wait a full year before making any big decisions, including selling their homes, moving, making career changes and plunging into new relationships.

Jaylene Howard, consulting director for Russell’s U.S. advisor-sold business, says the findings indicate women are more personally invested in their relationships with advisors than in past years. Before the global financial crisis of 2008, women tended to ride their husbands’ coattails in conversations with advisors. Now, she says, they are more assertive and take the view that they and their spouses each have a relationship with the advisor.

The advisors who retain widows are those who have considered both spouses as clients right from the start, says Kathleen Burns Kingsbury, author of “How to Give Financial Advice to Couples,” and consultant to financial planners. “They are the ones who have provided the couple what they need, based on his needs and her needs,” Kingsbury says. “If the advisor has helped the couple navigate difficult times in their lives, then he has a firm relationship with that widow to help her in her time of transition.”

The Russell survey found that what women want most from an advisor is active listening skills. If you are currently dissatisfied with your advisor, now’s the time to switch, Kingsbury says, so that you have a solid working relationship when the unexpected occurs. “A skilled advisor can ask questions about what would your life look like. What would your expectations be, if you were widowed?” she says. “It’s the responsibility of the advisor to develop a relationship with both spouses.”

And it’s the responsibility of each spouse to speak up in meetings and voice his or her financial priorities. The Russell survey found that 27 percent of midlife women and 36 percent of retired women felt their advisors really understood the scope of their financial goals. Those who thought their advisors understood them were much more likely to expect to stick with that advisor.

Meanwhile, experts recommend taking several steps in advance to make the inevitable time of transition easier.

“There should be a system or plan in case of the unexpected or expected death,” Howard says, “and processes in place to carry out when you probably can’t make rational decisions.”

Advisors agree that both spouses should know how to find and activate:

  • The will

  • Insurance policies

  • Social Security benefits

  • Trusts

  • Financial accounts

  • Passwords and access information to accounts

Pam Villarreal, a senior fellow with the National Center for Policy Analysis, says as the fog of grieving starts to clear, widows can build a new context for their financial decisions that reinforces their new independence.

The first step she recommends is to benchmark the portfolio’s performance against norms for the key investment categories. “There’s no point in changing if things are going well,” she says. One important point of research is to understand exactly how all advisors and agents make money from the relationship so you can understand at least some of the motivations for any recommended changes.

Joining an investment club is likely to introduce you to other women who have traveled the same road.

And moving into the driver’s seat frees up the shotgun seat for an adult child.

Choosing a financial companion is a powerful proactive step in advance of an expected death, such as that of an elderly or terminally ill spouse. Introduce adult children to the financial advisor to build rapport. Agree on which adult children will accompany you to the first meetings with the advisor after the death.

The first couple of meetings should concentrate on just a few essential decisions, and the companion’s role is to note the to-do list. Difficulty concentrating is a normal part of the grieving process, Kingsbury notes, so it is critical to have another set of ears in that meeting.

“This is not a time to be technical. It’s a time to take things slow,” Kingsbury says. “If you feel overwhelmed, be prepared to assert your boundaries.”

Experts agree that couples intuitively avoid wading into the topic of survival benefits and subsequent financial resources and expectations. But the reality is actually “a relief,” Kingsbury says. “When you do talk about it, you find out some interesting things about your partner and about how the financial advisor can help, and it makes you feel as comfortable as you can be with the fact that someday you may be sitting in this office alone.”