What Widows Expect From Advisors
Time, trust and an advisor who returns calls.
By CAREN CHESLER
Sandy takes out her checkbook and points to an entry halfway down the page.
“You see what I did here? I was supposed to add in $5,100 and I wrote $51,000. Now, all these numbers are wrong,” she says with disgust. “I don’t know what I’m doing with this stuff.”
Sandy, 62, says she’s always been afraid of numbers. And reading maps. And getting lost in the car, driving to the airport, learning new things on the computer, and checking the air in the tires of her Lexus.
It didn’t seem to matter because her husband took care of all that. Until recently. Two years ago, her husband was diagnosed with esophageal cancer. Ten months later, he was dead, leaving Sandy with well over $1 million, sprinkled across two dozen bank and brokerage accounts, CDs, bonds, trusts and real estate investments. It was all neatly organized in a system of folders, statements and charts that only the creator of that system could understand. She’s had a year to decipher everything, and she still can’t tell you whether her net worth is closer to $1 million or $2 million.
“He said I want you to understand all this stuff in case anything ever happens to me. I said, ‘Nothing’s ever going to happen to you,’” Sandy says. She sighs. “As long as we had the money to do the things we wanted to do, and I had a little pocket money, I was happy. That’s all I had to know.”
Sandy is no different than her widowed friends Honey, Doris and Harriet, women whose names betray their generation and whose last names were withheld at their request. These women aren’t baby boomers, who raised children while cultivating a career and balancing a checkbook on the tip of their nose. They’re women of the 1940s and 1950s. The only entry on their resumes is homemaker. Ask them what a hedge fund is and they’ll look toward the shrubs in the garden.
Women in their sixties and seventies may not be as savvy as their younger counterparts, but they’re smart enough to fire their dead husband’s advisor if he’s not meeting their needs. And their needs go beyond solid returns on their portfolios. They want someone they can lean on, like they leaned on their husbands, someone they can trust, someone who will ask them if they’ve lost more weight. And mean it.
Advisors may also be required to scale a wall of skepticism as high as the moon. Honey, 70, says she’s read so many stories in the newspaper about scams perpetrated on widows and senior citizens that she trusts no one with her finances. She has no trouble making financial decisions. She simply says no.
“It could all sound very good to me, but I’d be afraid to take a chance,” Honey says. “I’m a very suspicious person when it comes to things I don’t know anything about.” Investing clearly falls into that category.
Harriet, 68, says she used to have a financial advisor—the one her husband used for years. But shortly after husband died two-and-a-half years ago, the stock market tanked and she asked the advisor to sell all her stocks. When he told her to wait, she dumped the advisor along with her stocks and was content to take a loss.
She has homes in Boca Raton, Fla., and Suffern, N.Y. She says when her husband died, she received nearly a dozen calls from brokers but hired none of them. Instead, she handed over all of her assets to her son-in-law, who is a lawyer. He sends her monthly statements, though she doesn’t read them. When asked about the condition of her portfolio, she says, “I have no idea.”
“I don’t follow it,” Harriet says. “He could be embezzling from me for all I know.”
Doris, a 65-year-old former elementary school teacher, says she was overwhelmed when her husband died of esophageal cancer last year. The couple had mortgages on homes in Pennsylvania and Florida, investments with nine different stockbrokers and money coming in from all over the place. Her husband, who worked in the garment district, had spent a lifetime creating his portfolio. When he died, she was left with a jigsaw puzzle whose pieces were scattered across the Eastern seaboard.
“I didn’t delve more into the finances with my husband while he was still alive because he didn’t want to believe he was going to die, and that made it difficult to talk to him about it. He was such a strong person that it wasn’t until the last month that he realized he was going to die,” she says.
Rather than pawn it off on her son, who is a CFA and a CPA, she decided to hire a financial advisor. She interviewed several candidates, including a woman who Doris says was not a good fit, personality-wise. After finding an advisor she liked, she ran his credentials by the Pennsylvania Securities Commission. She also liked that he drove an hour-and-a-half to meet her at her home.
Doris pays him 1% a year to manage $1.5 million and calls him about three times a month with financial questions. She doesn’t mind that sometimes it’s her advisor’s assistant who calls her back. Her son monitors her monthly financial statements, to make sure everything is on track, but she says he didn’t want the responsibility of investing her portfolio in case something went wrong. “I bother him too much as it is. He doesn’t like it,” Doris says.
Doris says she likes someone taking care of her financial matters, and she wants that person to show an interest in her personally, but only to establish rapport. “I don’t want a whole hour of bull. It’s more an initial showing that he’s interested and he remembers something about me as a person,” Doris says. “His time is valuable and I don’t want to take it up with a lot of garbage.”
That initial show of interest is vital. Doris says when her husband died, she called all his brokers to let them know what happened. Not one—not Salomon Smith Barney, not UBS PaineWebber, CIBC World Markets, First Union Securities or several others—made a follow-up call in the months that followed. It wasn’t until her financial advisor requested her money be transferred from their accounts that any of them contacted her.
“One of the reasons they didn’t get my business is because no one followed up with me,” Doris says. “I didn’t have a relationship with them. They had one with my husband. I thought they should have followed up with me.”
Her primary concern is to have investments that produce enough income to cover her monthly bills. She’s so concerned about monthly expenses that she keeps $100,000 of her husband’s life insurance money in a checking account and a bond fund that is easily accessible. “I’m in great shape, but I hope I don’t lose it all. You never know what’s going to happen,” Doris says.
Mark Colgan, a CFP in Rochester, New York, says it’s common for widows to fear the money won’t last. Many of them went from their father’s home to their husband’s home, and at the age of 65, are forced to be financially responsible for themselves for the first time in their lives. “Advisors need to understand that widows have an unusual fear of running out of money, because now they’re dependent solely on themselves,” Colgan said.
Colgan understands the widow psyche more than most. He’s a widower himself. Colgan lost his wife two years ago to complications from a congenital heart condition. She was 28. A financial planner with years of experience, Colgan said even he had a hard time managing his financial affairs after his wife died, mostly because he couldn’t concentrate.
Colgan says during that first painful year, he sought resources and information on how to handle various aspects of his wife’s death, from finances and insurance to paying for the funeral. There was nothing to be found. He decided to write down what he learned, should his clients find themselves in that position. Colgan says the attorneys he worked with were so impressed with his makeshift manual that he decided to publish it. The second edition of his book, entitled The Survivor Assistance Handbook: A Guide for Financial Transition, came out in February, and the book is already selling in 30 states and being distributed by a dozen hospice associations.
The book explains how to deal with issues as basic as protecting against burglary during the funeral, cashing in on a life insurance policy and how to collect Social Security. There’s a chart to fill in the household budget. There’s another page to write down where the will and safety deposit box key are located.
Colgan has become a student of the widow market and can reel off the statistics: The average woman is widowed at the age of 56. Half of all women become widowed by 65. And nearly 75% of widows now living in poverty were not poor when their husbands were alive.
“The advisor really needs to understand what’s going on in their lives, to take a holistic approach,” Colgan says. “I don’t just tell them about the portfolio. I ask them how they’re doing otherwise. Are their household expenses under control? Have they found someone to do the yard work? Is someone talking to them about their credit cards?”
His sympathetic approach has paid off. Half of all new clients are widows, and most are sizable accounts. That figure used to be about 5%. Colgan says a man, whose wife is still alive, recently heard about Colgan’s book and gave him $1 million to manage because he liked Colgan’s positive attitude. “They’re entrusting me with everything,” Colgan says. “They feel comfortable with me.”
Colgan says he’s concerned about widows, though. Some can end up with a bad advisor and not even realize it. One woman came to him last fall after losing $100,000, and her portfolio still had a healthy concentration in technology stocks. And the rest of her investments were not very well diversified across asset classes. “It’s a vulnerable position for them to be in,” he says.
It’s no wonder that widows are vulnerable—many don’t trust their own judgment. Sandy uses the transitive theory for financial advice: If her friend, Jimmy, finds someone trustworthy, and she trusts Jimmy, then whomever Jimmy uses must be trustworthy. He’d better be; she’s going to rely on him for a lot.
“I want someone who can do it all for me because I don’t want to have to think. I’m not interested in understanding finance,” Sandy says. “I want someone who will take care of me.”
Copyright © 2003 Charter Financial Publishing Network Inc.