Common Problems That Widows and Divorcees Have With Their Financial Advisor

It is not uncommon for one partner in a marriage to handle the majority of the shared household finances. Although many people prefer this type of one-sided financial management for their relationship, it also puts one partner in an extremely vulnerable position.  If you don’t understand your own financial plan or have a relationship with your advisor, you may become dependent on your spouse to help you make big financial decisions.

The people who most often feel the effects of this vulnerability are widow/widowers and divorcees who once relied on their spouse to handle their finances. In fact, studies show that the majority of widows will switch financial advisors after their spouse’s death because they don’t have any form of a relationship with them.

If you’re in this position because your spouse used to handle your finances, here are some common client-advisor problems you may face and my advice on how to solve them.

Your advisor speaks in confusing financial jargon that you do not understand.
Be up-front with your advisor if you don’t understand what they are saying. Ask them to speak in simpler terms so you can follow along and better understand what they are explaining. They are there to help you, not confuse you.

You are not sure if you can continue to afford your current lifestyle.
If you don’t already have one, your first step is to create a financial plan. If you have one but don’t understand it, schedule time to review it with your advisor and see if you’re still on the right track. As time changes your financial situation may too, so scheduling a meeting to review your plan is always a good idea. Understand it may take more than one meeting to plan out a financial or retirement plan.

You do not have a personal relationship with or trust in your current advisor.
Be honest. To build a personal relationship with your advisor you have to be open to sharing your life goals and ambitions so they can help you plan and achieve them. You can also use your discretion to assess whether or not you feel comfortable having this kind of personal relationship with your current advisor. Many widows find that their advisor was uninterested in them until their husband died, which is why so many women choose to find new advisors all together.

You feel like your advisor isn’t telling you the honest truth with news they know you will not like.
It’s never safe to be in the dark about your financial situation, and sugar-coating won’t do you any good. To achieve open communication, tell your advisor that you want and need honest advice. You also have to understand that to benefit fully you have to be open to hearing the honest truth, even if it is bad news about your finances.

They are pushing you to make financial decisions, and you do not feel ready.
If you are emotionally overwhelmed from say, being recently widowed, your emotional state can fog your ability to make decisions and you shouldn’t be pushed. Ask your advisor to put your money in a safe place for now, until you can decide what you want to do with it. If you are going through a major life transition, try to limit yourself from making large financial decisions and focus on things that are time-sensitive. If there is no time constraint and you don’t feel ready to make a decision, your advisor should not be pressuring you.

What to look for in an advisor:

• A qualified professional. It may seem obvious, but make sure that you do not entrust your money with just anyone. Ensuring your finances are protected by a qualified professional is step one to finding the financial advisor for you. Look for someone who is a fiduciary and has a legal obligation to act in your best interest.

• Someone who doesn’t sugar-coat their advice. You don’t want an advisor to always smile and nod at what you’re saying, you want someone that outlines risks and is realistic with you about your finances. They should be helping you plan for life’s surprises and preparing you to be financially secure. You need an advisor that you can trust is telling you the truth.

• Someone that actively helps you achieve your goals. Your advisor should have your best interest at heart, aiming to build you a financial plan that helps you achieve your life dreams and goals. Your advisor should be actively helping you reach these goals through financial advice and planning.

• A trusting, personal relationship. Your financial advisor is dealing with more than just numbers, you are telling them details about your life and personal ambitions. You want to have an advisor that you have a personal relationship with, someone you can trust and someone that is dedicated to you as a person.

• An advisor that includes both partners in the conversation. If you’ve made this mistake once remember that in the future that you should always be involved and informed in the financial advisory process with your spouse. The key to planning a future with someone is having both people in the relationship involved, ensuring you both understand your financial situation and are comfortable with the financial decisions that are being made.

 

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BMO Nesbitt Burns Inc. (BMO NBI) provides this commentary to clients for informational purposes only.  The information contained herein is based on sources that we believe to be reliable, but is not guaranteed by us, may be incomplete or may change without notice.  The comments included in this document are general in nature, and professional advice regarding an individual’s particular position should be obtained.  BMO NBI is a subsidiary of Bank of Montreal and Member-Canadian Investor Protection Fund. “BMO (M-bar Roundel symbol)” is a registered trademark of Bank of Montreal, used under licence. “Nesbitt Burns” is a registered trademark of BMO NBI, used under licence.