When your spouse dies, who’s got your financial back?
I recently read an article by a financial adviser regarding how to help manage the affairs of a widow or widower after the passing of a spouse. Unfortunately, the article was by a financial adviser and written for financial advisers. It described “amazing opportunities,” ostensibly to help survivors during times of unimaginable loss.
It struck me as odd that this was seen as an “opportunity” and not as a “mission” to help someone during one of his or her darkest moments and at a time when the surviving spouse is the most vulnerable.
What if the article had looked at the situation from the survivor’s perspective? What is the widow facing — emotionally and financially — and how can you help them emerge from the haze, from facing an unimaginable loss into clarity?
In many ways, such survivors have been set up for a stressful situation. They have often let their spouses take the lead on finances and relationships with advisers, accountants, family office CFOs and the attorneys who oversee their affairs. This often leaves them confounded by what they face.
This becomes especially problematic when the decedent was the main or sole breadwinner or the source of inherited wealth. During marriage, the surviving spouse might have been on the sidelines, living well, and left unaware about financial affairs. Even smart and educated spouses might entrust their soulmate with the finances. I had a banking executive for a client who, upon the passing of her husband, was unaware of their finances. This isn’t a matter of intelligence; it’s about involvement, often compounded by the shock of loss.
In that soul-crushing moment, they’re left to navigate horrible realities. Who is the financial adviser or private banker? What’s the family office CFO’s phone number? Do they even know the account numbers or how to log into the accounts? What are our assets?
On top of that are complicated matters such as probate, registration of the death, renaming of accounts, titling of cars and other assets, what attorney has the trust documents? Even paying bills is a challenge. Where is the checkbook? Lost doesn’t begin to describe the confounding feeling.
Which brings us to the topic at hand: financial advisers who see opportunity in all this chaos. In their defense, advisers often become accustomed to working primarily with one spouse. More experienced advisers will have invested time over the years getting to know both spouses. They should encourage both spouses to create a list, folder or envelope with all the accounts and a list of assets, and a contact list with names and numbers for the adviser(s), accountant, CFO, multifamily office, attorney, etc.
Most important, the advisers will have become accustomed to their client’s preferences, investment tolerances and general tenor on how they value assets. Then, the adviser will go to work. Will they have sufficient interest income to live off, or will they be living off principal? Once the client is widowed, the adviser will need to consider changing the investment strategy to match the widow’s preferences, tolerances and needs.
Moreover, if assets held in financial accounts pass not to a spouse but to another family member, that needs to be handled diplomatically and explained. This is no small discussion to have with someone who may be lacking any experience in investments or finances.
This becomes gut-check time for the widow. If you get a feeling your adviser isn’t hearing you and adapting to your needs, they’re continually referring to the deceased or dismissing your suggestions or preferences, be prepared to make some changes. “I trust them because my wife trusted them” is no rationale for staying with any adviser.
For investment advisers, you have to build that relationship and be prepared to adapt to changing circumstances. Pretend that the spouse of your longtime client is a brand-new client.
If you’re that spouse who has left all these details to your mate, it’s time to change your habits. Talk to your spouse. Invite yourself into the conversation. Create a checklist in case one of you should pass. Gather the names and contact information for key advisers. Download the banking app, and ensure you have separate logins. Death isn’t the only possible circumstance that could leave you in the lurch. Divorce can be even more ugly — and isolating.
In these times of unimaginable loss, let’s make sure your financial future or investor confidence isn't lost because of an adviser more concerned about turning your loss into their “amazing opportunity.”