Most widows switch advisors when their spouses die-but that has more to do with the advisors than with the widows.
My friend's aunt was recently widowed. The aunt wanted a new financial advisor because she didn't have a relationship with the one chosen by her late husband. She didn't know how to find an advisor and this friend recommended someone he thought would be perfect. To be helpful, he went along to the initial meeting for support.
The meeting didn't go well, since this advisor spent time telling this new widow how he invested only in exchange-traded funds (ETFs) and why his portfolio theory was superior to that of his peers. The recently widowed women walked out not because she didn't understand the investments but because she wanted to sit down with someone who would spend time listening to her. This advisor had no idea who she was or what mattered to her.
This was an eye-opening experience for my friend. He assumed that any smart and experienced advisor would know how to help his aunt through her transition. But this advisor didn't and he is not alone. In fact, recent research tells us that 70% of widows seek out new financial advisors after their husbands' death.
WHO THEY ARE
Part of the problem is that most financial advisors think widows are little old ladies who have never managed anything but their households. Reality check: the average widow in the U.S. is 56-years-old and has a college degree; she's worked outside the home, perhaps earning more than her husband; and she has at least managed the household finances. These are generally capable women experiencing a very stressful and confusing life transition, and as a result their normally high capacity to function is temporarily diminished.
Widows are usually both aware of their limited capabilities and frightened by them. They don't want to make a mistake and have no idea when their normal coping skills will permanently return, so they feel vulnerable and often paralyzed.
At the same time, they're getting advice from all directions. Sometimes it's good advice devoid of sensitivity and/or delivered at the wrong time. Sometimes it's self-serving advice calculated to strike at their weakest moment. This all feels overwhelming and tough to sort through-like high-volume noise they just want to silence. Widows need people who understand this.
Kate felt like a ship barely making it back to port after being hit by a torpedo when her husband died. All her defenses were down, her navigation system was broken and all she could do was keep moving, praying for safe passage. She needed a barge to pull her boat safely to port.
She shared this analogy with the advisor she and her husband worked with during the condolence phone call. His response: "I'm sorry for your loss. When you come in to sign the papers I'll keep the investment recommendation brief."
Kate never showed. Instead, she asked other widows for recommendations and two suggested the same advisor: a woman who had also lost a spouse. The new advisor gave Kate plenty of time during their meetings, didn't pressure her to act before she felt ready and set generous and movable timelines for making decisions.
WHAT WIDOWS WANT
Financial advisors don't have to be a widow or be a woman to work well with widows. But they do need a process to determine their pace, comfort level for addressing decisions and personal communication preferences. Widows want to know there is a way to bring order to their chaos-steps to follow guided by someone who knows the way.
In the early stages of grief some of the worst decisions and commitments are made. Rather than waiting until things settle down, the widow needs an advisor with a process for keeping her safe while she takes time to heal. And she needs that person as soon as possible.
The process begins by identifying what's urgent and separating it out from competing thoughts and fears. Only after the advisor helps the client identify her immediate needs should he or she make any recommendations. Those recommendations should be delivered in a way that helps the widow gain the clarity she needs to make confident decisions.
Before Christine's husband died, he ran the day-to-day part of their successful mortgage business. His death was unexpected and the timing couldn't have been worse-it was at the height of the 2009 financial crisis, when the real estate market was crashing and the mortgage industry was collapsing.
Christine was in shock. The grief hadn't even sunk in and she was faced with huge, immediate decisions that would shape the rest of her life: close the business, sell the house, declare bankruptcy or just curl up into a ball and hide. Despite the reality that she had managed the business and family finances and had reasonably good insurance and savings, she panicked and wanted to sell everything and run away. Her physical and psychological state was far more threatening than her financial situation. She couldn't read financial statements or insurance policies, and each piece of mail felt like a 100-pound weight.
We found out how we could help Christine by asking about her communication style. This gave us valuable information about what she needed to make decisions and accommodated her need for details and reports. We listened to Christine when she talked about being conservative, always thinking of safety first. She wanted to know that she was okay and could weather the market crash. We mapped out what needed to be done immediately and made a list of everything that would be safe to put off for a few months. We also created a simple cash flow overview using clear terminology, graphics and arrows to show her that she was okay and would be okay going forward with or without the business.
One year later, the mortgage business is doing well. Christine intends to run it for at least 10 more years. Although things are still emotionally difficult, Christine is feeling confident about her decisions and has reclaimed a sense of well-being.
A GO-TO FOR WIDOWS
Dealing with people in emotional crisis requires both understanding and real skill. Here are some best practices – which we follow at Northstar:
- We will listen with empathy, beyond normal active listening. We will listen to and respond to widows answers and then ask the logical next questions.
- We realize when a widow is in the early stage of grief. This may be an intense, almost immobilizing time for her. We will let her know that most things can wait until she is ready, but there may be some that need more immediate attention.
- We will be available to talk about more than investing. There may be questions about whether she needs to continue to work or can take a leave of absence, or even retire. These are big questions that will not have immediate answers.
- We have been trained to recognize the signs of stress and consider the emotional impact of losing a spouse. We help widows avoid making mistakes under these conditions that could impact their long term financial security.
At Northstar, we are advisors who can guide someone through one of the most difficult life passages. Widows tell us that they want to share our name and some of what they learned from us with every other widow they meet.
We are here to help you and others you know with life-changing events and life's financial transitions. Please contact us for a copy of our Widow's Guidebook or contact us directly at 603-458-2776.