There’s a statistic that has become something of an urban legend in the financial field. It states that two-thirds of widows leave their advisors after their husbands die, but that widowers tend to stay with their advisors after their wives die.
To find out whether this assumption had any validity, the Center for Women and Financial Services and the Center for Retirement Income at The American College conducted a survey of recently widowed women and men. The findings offer some hopeful surprises and provide interesting insights — as well as some lessons learned — as to why people leave an advisor, stay with an advisor or drop an advisor altogether.
When tracking widows’ financial behavior after their husbands’ deaths, the glass is actually slightly better than half full — and not as empty as predicted. Fifty-five percent of widows continued working with the same advisor. The survey did find widowers were more likely to continue working with the same advisors after their wives’ deaths. However, the percentage of those widowers — 66 percent — was not as great as might be expected.
Although these figures are somewhat encouraging, especially when they pertain to widows, there are many widowed people who do switch advisors or who decide not to be advised at all. That’s the glass-half-empty perspective. Forty-six percent of widows leave their advisors, including 35 percent who switched to a new advisor and 11 percent who dropped their advisors and became unadvised. Twenty-two percent of widowers switched advisors and 12 percent became unadvised.
Reasons Why They Stayed
Let’s first explore why widows and widowers stay with their advisors. Both widows and widowers who were satisfied with their advisor indicated that it was because their advisor was providing good results. But more widows (45 percent) than widowers (25 percent) indicated that they kept working with their advisor because of an established, trusted, reliable relationship. In addition, more widows (78 percent) than widowers (60 percent) reported that a major factor in continuing to work with their advisor was that the advisor took time to educate them about their financial options. For both widows and widowers, reasons for remaining included the advisor’s knowledge of financial planning and investing, and being available when needed.
Reasons Why They Left
One surprising finding was that, of those widowed people who left their previous advisor, many did not choose to do so. Nearly two in 10 had to do so because their advisor retired or moved. There were also other reasons for leaving. Widows reported that a major reason for switching was that they had a bad relationship with their previous advisor. They reported the advisor wasn’t helpful and didn’t take the time to educate them on financial options.
Widowers, on the other hand, indicated that their main reason for leaving was that they had different goals or a change of goals after the deaths of their wives. For those who dropped their advisor altogether, the reason was that they felt they no longer needed their advisor’s services or advice. This was especially true of widowers. Men also felt more confident that they could do things on their own.
What the Widowed Look for in an Advisor
The overwhelming majority of both widows and widowers were satisfied with their primary financial advisor (72 percent very satisfied and 25 percent somewhat satisfied). Interestingly, widows’ satisfaction level increases more than that of widowers after the death of a spouse. One might speculate that women, faced with the sole responsibility for their own finances after the deaths of their husbands, need someone who can understand the transition and help them move into this role. In fact, nine in 10 widows would recommend their primary financial advisor to friends and family.
The advice that both groups receive is primarily in investing, financial planning and retirement income planning. Both widows and widowers are most concerned about having enough money to last throughout their lifetimes. Their other concern is being able to afford long-term care. Widows are more likely than widowers (23 percent versus 14 percent) to say that they are extremely or very concerned about their ability to stay in their home as they age. This points to a disconnect. Despite concern about frailty and care needs, the survey indicated that few advisors actually are helping widowed people prepare for long-term care.
Takeaways and Lessons Learned
When people become widowed, the responsibility of managing money and determining a sound financial future rests solely on their shoulders. For widows in particular, advisors who take time during the transitional period to build a strong relationship, offer a sympathetic understanding of a new life stage, and explain and educate about financial options are more likely to retain their widowed clients.
Because widowed people are concerned about long-term care but few advisors seem to be helping people plan for it, discussions about care in the later years should be included in retirement planning. Advisors should discuss with their widowed clients who will provide the care, what living arrangements are preferred and how it will be financed.
A final takeaway is the need for advisors to engage in succession planning so that their older clients who become widowed have continuity in advice. This is especially true for advisors who have grown old along with their books of business. Because many of us will be living into our 80s, 90s and beyond, a new focus on the particular needs of widows and widowers will be valuable to older clients and to those who provide financial products and services.
Sandra Timmermann, Ph.D., is visiting professor of gerontology and retirement living with The American College of Financial Services. Sandra may be contacted at [email protected]