Financial advisors and financial planners face several challenges in advising widows. For one, members of the financial services consulting practice at Boston Consulting Group find that nearly half of new widows seek to change financial services providers within the first year after their husbands’ deaths. This is largely because an increasing number of women are acting as the de facto chief financial officers of their households. Another challenge is that even financially astute women can be distracted and find it hard to focus on financial matters for a significant period, even years, after their husbands’ deaths, as they deal with grief, especially if the death was sudden and unexpected.
Accordingly, many financial advisors and financial planners are developing special educational sessions and materials for new widows. This sometimes reflects input from psychologists., especially with regard to advising widows who are still dealing with grief.
Recommendations for Advising Widows: A consensus of expert opinion on advising widows is that they should avoid hasty decisions on major financial issues, such as the sale of their homes. A rule of thumb is that such serious moves should be postponed for a least a year after the husband’s death. The intent is that emotions should not be the major driver of decisions that will have significant impacts for years to come, and which are hard to undo once undertaken.
Additionally, financial advisors and financial planners often are criticized for not being patient enough to listen thoroughly before advising widows on investments or savings. Financial professionals who are experienced in dealing with new widows suggest that the first meeting after the husband’s death should avoid purely financial matters. Instead the widow should be given an opportunity to talk about her recently deceased husband. The payoff, according to one executive of a wealth management firm, is that widows who business is retained tend to be especially loyal clients who are prime sources of client referrals.
A common problem is that new widows find that they have insufficient insurance or savings relative to their expected standards of living. This is especially true for younger widows, such as those in their 40s.
Widows who are not already their families’ chief financial officers often need help to get started in dealing systematically with bills, understanding brokerage and investment account statements, and getting familiar with the terms and conditions of insurance policies (health, life, property, auto, etc.).
Furthermore, advising widows should go beyond purely financial matters, and include referrals of psychologists, grief counselors, career counselors and public speaking coaches, as needed.
From the standpoint of financial services firms, some are seeing merit in helping their financial advisors and financial planners in advising widows by creating a new class of specialists who can be brought in to coach financial advisors.
TD Ameritrade is a firm that is addressing the business potential that they see among the recently widowed through:
- A website with relevant financial education materials
- Video presentations about the financial and emotional impacts of becoming a widow
- Checklists that can be filled out and used to structure discussions with their financial advisors
- A “Financial Triage” worksheet (under development) that clients can use to identify their chief financial vulnerabilities and start taking control over them
- Placing “transition specialists” in its call centers to field calls from widows
- Training independent advisors who process trades through the firm about advising widows
Moreover, TD Ameritrade is taking an especially proactive approach by also pitching these materials to women whose husbands are still living, to help them be more prepared in case they are faced with living alone.