Journal of Financial Planning: March 2024
Alexandra Armstrong, CFP®, CRPC, is founder and chairman emeritus of Armstrong, Fleming & Moore Inc. (https://afmfa.com). She was one of the first female CFP® practitioners in the United States, as well as the first female president of the IAFP (precursor to FPA). She founded her financial planning firm in 1983 in Washington, D.C. Since then, she has focused on helping women achieve financial independence. She is the coauthor of Your Next Chapter: A Woman’s Guide to a Successful Retirement and the recently revised and updated sixth edition of On Your Own: A Widow’s Passage to Emotional and Financial Well-Being.
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According to the 2020 Census, there were 129,966,000 women in the United States. Of these, 11,271,000, or almost 9 percent, are widows. Looking at the statistics more closely, 87 percent of these widows were over the age of 65. In contrast, as you might guess, of the 122,182,000 men, only 3,487,000 were widowers, or almost 3 percent. In other words, widows outnumber widowers three to one!
Working with Widows Can Be Very Rewarding
Much has been written about the need for advisers to focus on niche markets instead of trying to be all things to all people. Without sounding too morbid, it is my experience that widows can be excellent clients. They need and appreciate help. They are motivated to act, and they are most appreciative of your advice, assuming you are willing to take the time and effort to help them.
Thirty years ago, I realized that the advice I was giving new widows was going in one ear and out the other. I thought that if I could give them a book that they could read at their own speed, that would help them recover. Therefore, I wrote On Your Own: A Widow’s Guide to Emotional and Financial Well-being with a psychologist who is a widow, a client, and a friend. This book was based on our professional and personal experiences. The purpose of the book was and is to help widows cope better with the dramatic emotional and financial alterations that occur in their lives following the loss of their spouses. We believe that there’s a strong relationship between the widow’s financial and psychological recovery. The subliminal message of this book is for the reader to get her financial affairs in order before she is in a crisis situation of widowhood or even divorce, thus allowing her to deal with the emotional issues more easily. We have just updated and revised this book and published our sixth edition.
In this column and the next, I will share with you insights based on our many years of working with widows in hopes that they will help you work more effectively with your widowed clients.
Widows Are Not All the Same
As advisers, we might think of widows as one homogenous group. This is a mistake. It is important for us to understand that they differ in many important ways and that how they recover from the death of their spouse depends on a variety of factors. The widow may be young or old. The cause of her husband’s death may be sudden (which is more difficult emotionally to handle) or due to a lingering illness. She may have no children or close family to help her recover. Or she may have adult children who try to help her too much or minor children who need her help. Her marital relationship might have been a happy one or not so good. She might have sufficient financial resources but, in many cases, doesn’t know if she has enough. She may have a lot of investment experience or not so much. She may have worked outside the home or may have always been a homemaker. Whatever the situation, it is your job to find out what it is so you can help her effectively.
What They Have in Common
Whether the spouse’s death was anticipated or not, the finality of the event is a shock. In fact, according to one source (The New Widow’s Guide to Financial Wellness by Chris Bentley), many widows experience “brain fog” where their decision-making ability is impaired. In some cases, this fog can last two years or more. As an adviser aware that this may be the case, be careful to keep your advice basic and put it in writing, particularly at the start.
The new widow is afraid of the future since her whole life has changed. The most frequent first question I heard from widowed clients, regardless of their resources, was: “Do I have enough money to maintain my lifestyle?” The sooner you can answer this question, the happier they will be.
The Emotional Impact of Widowhood
Although we aren’t psychologists, it is important that we are aware of what our widowed clients are experiencing. You probably have heard about Elisabeth Kübler-Ross’s work on the stages of grief: denial and isolation, anger, bargaining, depression, and acceptance. More recently, William Worden has recommended approaching the recovery process in four tasks. They are accepting the loss, addressing the pain of the loss, adjusting to a new environment, and recognizing you are in a different place. Whatever approach is most applicable, most widows go through these sequentially, although the time frame varies from one person to the next. And whatever time frame is applicable, the recovery process is not linear. The widow will have good days and bad.
Working with a Current Widowed Client
As soon as you learn of a client’s death, price the portfolio as of the date of spouse’s death. If appropriate, try to attend the memorial service. Recognizing that the widow may still be in shock and may not remember you were there, sign the book of attendees, as she will read it later. In any case, the family will probably be aware and will appreciate the fact that you cared enough to make the effort to attend the event. Whether or not you are able to attend the memorial service, write (do not email or type) a personal note of condolence to the widow expressing your concern about her loss, and at the end say that you are available to help her as soon as she is comfortable meeting with you. If there is a charity named in the obituary, make a contribution. Most charities don’t tell the widow the amount given, only the name of the donor, so the amount is up to you. In a couple of weeks, if you haven’t heard from her, call to check how she is doing and ask how you can help.
If you aren’t familiar with Amy Florian’s book, A Friend Indeed: Help Those You Love When They Grieve, I strongly recommend it to you. This book is an invaluable resource as to how to appropriately express your concern for the widow’s loss. Communicating appropriately at this stage is crucial to your future relationship.
First In-Person Meeting with a Current or New Widowed Client
When setting up your first meeting, we recommend the widow consider bringing someone along with them to take notes, as the widow may still be in the “fog” state. When you first meet, express your sympathy and reassure her that you are there to help her. The sooner you can help her understand her financial situation the better, as this is a major source of stress for most new widows. Help her gather all the relevant information so that you can put together her projected sources of income and expenses. In some cases, we actually have gone to the person’s home and helped her sort out her paperwork, which can be overwhelming. Ask her for the names and contact information of her other advisers and family members with whom you will coordinate.
Suggest she keep a diary of what she does each day, which would include meetings with advisers, friends, and doctors. It would also include a “to do” list that she would periodically update. If you want to go the extra mile, you might even give her this notebook.
Warn Her to Avoid Irrevocable Decisions
An often-repeated piece of advice is not to make any irrevocable decisions in the first year after widowhood, and I think it is a good one. The key advice is to tell the widow that she shouldn’t make any meaningful financial decisions before she fully understands her total financial picture.
It is understandable that the recent widow wants to make decisions to indicate she is in control of events when she has just experienced an event she couldn’t control. And assuming the widow can afford it, spending money on minor postponed expenses can be alright as long as she doesn’t go overboard. Try to persuade her to defer the lavish family vacation plans and large purchases.
Family members or friends may assume the widow is wealthy and ask for monetary loans or gifts. In the initial meeting we recommend that, although they might eventually give money, they can use you as an excuse to say no at least for the time being—that she had promised her financial adviser she wouldn’t make any loans or gifts at this time.
Often, the recent widow wants to pay off her mortgage or car loan. She might want to sell her house and move to another location. These may or may not be good ideas based on her financial and emotional situation. Best to wait until the total picture is clearer.
And finally, although investing the proceeds of an insurance policy (should she have one) in an annuity may be a good part of her financial plan, again we suggest she not make this decision until she sees how it might fit into her overall picture.
To Be Continued
In my next column I will cover longer-term suggestions to help you work with widows more effectively.
Read Next: “3 Communication Skills for Working with Grieving Clients,” March 2017