Financial advisors often miss that widows aren’t prepared to process investment-only thinking. Here’s what you need to know to find answers to your financial questions and what to know before you hire a financial advisor.
He got the mail every day. He filed the paperwork, paid the bills, and managed a rough home budget. He let me know we were okay to schedule the vacation, make that purchase or pay my daughter’s college tuition. I needed that assurance because the way I thought about money was different than the way he did.
I didn’t like to think about spending money—I was a saver. He loved to think about money, and he knew how to spend it on things that brought him joy. We learned to laugh over stories like the $500 golf bag that was “such a great deal.” I insisted he return it to the store because it didn’t cook breakfast. We balanced each other–and then one afternoon, a massive heart attack took his life, and there was only me.
The mailbox, the inbox, and the piles of paper in his office became places of anxiety in the aftermath. I didn’t know I had to find health insurance or figure out what to do with his work accounts. I wept the day I received a life insurance letter a few days after his funeral. I didn’t want money—I only wanted him back. Friends and family expressed confidence that my children and I would be “fine.” I didn’t know what “fine” was. I needed someone to tell me how to be okay.
I also didn’t know that someone was me.
Start with the Expert – It’s You!
Almost every widow faces the fear of uncertainty, but there are no cookie-cutter templates for the life grief brings to you. Your uncertainty depends on all the ways that loss changed your life.
How you face fear depends on your preferences, competencies, and desires for the future. And finally, your financial questions should be guided by the circumstances that frame your life, not someone else’s. That’s why you need to begin with yourself. You are the CEO of your life.
Don’t spend time worrying about answers or decisions. List your questions instead. Writing them down can help ease your mental load so you don’t have to try and remember them all.
Certified Financial Planner ™ of Wise Stewardship Financial Planning, Daniel Kopp, suggests organizing your questions and thoughts into three buckets: NOW, SOON, and LATER.
“There are many things that have to be done now when it comes to some of these decisions related to the probate process, filing claims with insurance companies, and other tasks with time limits.”
Tasks with timelines go into the NOW bucket. Figuring out a financial plan for the near future should go into the SOON bucket. Whether you feel comfortable budgeting income and forecasting financial needs depends on your temperament and skill set. Your financial situation may be simple; you may only need help with tax advice or occasional investment questions. Or, like me, you may need a holistic approach to planning your family’s financial future. I knew that finding professional help was in my SOON bucket.
I had the name of an old friend in mind, so I contacted him. I didn’t know how to tell if he was competent, trustworthy, or the right fit. Sometimes we learn things on the fly. My hope is that after reading this, you won’t have to.
Find the Advisor You Trust
Most people start out like I did: with a name or a Google search. There’s plenty of information out there: 639 million hits on “How to Find a Financial Advisor.” Finding one is the tip of the iceberg. Below lay a labyrinth of information, including financial jargon I didn’t understand. I hoped my friend could help, and he did–he weeded himself out.
Approximately 70% of all widows change financial advisors within the first year. Many advisors don’t know that widows aren’t prepared or willing to process investment-only thinking. I had no doubt that my friend was a trustworthy and competent advisor, but I realized he wasn’t the right fit for my needs. His focus was on investments. Investing is part of the big picture, but at the time, my questions were about things like whether I needed to get a full-time job; if I could pay for my children’s education; how to protect them if something happened to me; and what kind of health insurance was best for me?
Most advisors are generalists, but a rise in niche firms enabled me to find what I was looking for. Wise Stewardship Financial Planning specializes in serving widows in their 30s to early 50s, usually with children. That was me. “Money,” says Financial Advisor Daniel Kopp, “is not really about dollars and cents; it’s about hopes, fears, and dreams.”
Once I was sure I had found an advisor who understood me, a few tools helped to verify that he was who he said he was. The Financial Industry Regulatory Authority FINRA enables you to look up records of advisors who are brokers or sell investment products. In addition, the Investment Advisor Public Disclosure (IAPD) page on the Securities and Exchange Commission (SEC) website allows you to search the public records of investment advisors.
You can find information such as years of experience and complaints filed. The IAPD website lets you look at an investor’s comprehensive information by searching their name and then scrolling down and clicking on the name of their registered firm. From there, click on Part 2 Brochures, and you’ll see the information they must disclose to the SEC, including how they get paid.
Know How They Get Paid and Why
An advisor’s fee structure is important to keep in mind, especially as you look for someone to tailor-make a plan for your needs. Maybe purchasing a one-time “big picture” plan is best for you. Perhaps you need someone who will walk alongside you as a sounding board monthly or quarterly. Maybe you need investing guidance and someone who will charge based on a percentage of assets. Or perhaps you need a combination of these services.
The point is that you are a unique individual with unique needs. You need to find someone who only gets paid for the advice they give you and never takes any commissions or kickbacks. This approach is known as fee-only.
Some advisors are “fee-based, ” meaning they combine fees for advice and commissions for investments and products they sell. This can put you in a conflict of interest if an advisor wants to sell you a financial product or investment that benefits them. Avoiding this issue means understanding the difference between the two types of advisors.
The first type is a “fiduciary” advisor, who is legally obligated to always act in the client’s best interest. Fiduciary advisors must disclose all facts, including potential conflicts of interest, and manage your accounts fairly. If you’re looking for a fiduciary advisor, they will be willing to give you a fiduciary pledge in writing.
The second type of advisor operates according to the suitability standard and is paid based on commissions. They are only obligated to advise you on financial products that suit your needs—but these recommendations might not be the best option for you. Another option may be much better or less expensive. Certain financial products such as insurance, annuities, or individual stocks may have a place in your portfolio, but beware – there is a strong conflict of interest that doesn’t work in your favor there. You’ll want the advice of a fiduciary advisor before choosing an investment based on the advice of someone who gets paid for what they sell you.
Pull It All Together
So what is the best way to secure financial advice? If flexibility, customization, and fiduciary duty are what you want, then finding a fee-only fiduciary advisor is the way to go. The National Association of Personal Financial Advisors (NAPFA) provides helpful checklists for consumers and a searchable database of about 3,000 fee-only advisors nationwide. This checklist can help you compare options against each other for the best fit. In addition, a newcomer fee-only network called XYPN works with a broader range of wealth platforms and offers a variety of ways to work with advisors such as hourly, project based, flat annual fees, or assets under management. It features special advisor niches such as Wise Stewardship Financial Planning, which works with widows, military members, and their families.
Keeping a running list of your questions is a great way to understand your unique needs and guide your search for the kind of advisor who is right for you. Using a good list of tough questions to ask whoever you interview is just as important.
Ten Questions to Ask When Hiring a Financial Advisor is one of the best resources I’ve seen on the subject. The author, Daniel Kopp, is a financial advisor who used this list to hire his own financial advisor during the early days of his own grief as a widower. He knew that leaning on a support network would give him time to grieve and protect him from the financial mistakes sometimes made by widows and widowers during the early days of grief and brain fog.
My grief journey has taken new financial turns. I no longer dread thoughts about money—because I know it represents my hopes and values. In fact, I love talking about it. But even without a new perspective on finances, hiring an advisor has brought certain qualities to my life that I would have a hard time pricing. I sleep better at night. I spend less time worrying about the future, and I’m even learning to spend money on things that bring me joy. I suppose you would say I found someone to help me be okay again.