Fraught times require extra financial care
The widow was long past the first stages of money management after her husband died, leaving her to raise her school-age children.
She was past ordering extra death certificates and changing the names on credit cards and other financial accounts. She was still at work and managing the household by supplementing her income with life insurance proceeds from her husband's estate.
But her life was far from back to normal, said her financial adviser, Eve Kaplan, a fee-only financial planner. There were stock options to decide what to do with and just-discovered accounts that needed investment management. There was still college tuition to think about.
Kaplan has learnt that clients who have gone through divorce or the death of a spouse often call for a different approach.
"I do a lot of hand-holding and am happy to do it," she said. "Normally, all my client meetings are in my office, but I make exceptions ... This woman who lost her husband unexpectedly was just at a loss, so I've gone to her house on a regular basis to help go through the mail and deal with her accounts.
"It overlaps with more traditional bookkeeping services, but this is way more than issuing cheques."
As more financial advisers offer specialised services, it pays to check what's available and what is worth paying for, experts say.
"There's a huge push now in financial services to pay attention to women," said Nancy Fellinger, vice president for investments at advisory firm Coburn & Meredith Inc. More than ever, she says, clients in transition need to scrutinise credentials and consider potential advisers' "time in the saddle".
Getting beyond the perfunctory nod to some issues can be a challenge.
A survey of about 500 financial advisers presented in a recent webinar for the Retirement Income Industry Association found that 36 per cent provide clients with a recommendation for claiming Social Security benefits, for example.
Although almost all advisers (92 per cent) said they provide support for making decisions about Social Security, nearly two-thirds said they provide education or create potential claiming strategy scenarios without recommending a strategy, said Howard Schneider of Practical Perspectives, which conducted the survey with GDC Research.
"Clients want support in this area, and when you think about it, virtually everyone is impacted by Social Security and yet there's very little frame of reference going into it," Schneider said.
Advisers said many clients don't want to hear about delaying benefits, because they fear cuts in the program, Schneider said, and many advisers simply aren't aware of all the services available that can crunch the numbers and make recommendations.
Also, planning for long-term care may now be more important than maintaining life insurance policies, Kaplan said.
For pre-retirees, she said, the most important financial planning tool may be priming the pay pump.
For a client going through a divorce, Kaplan introduced a career counsellor to help the client boost her income and stretch the divorce settlement. Unfortunately, the counsellor started giving the client financial advice, which Kaplan found to be unethical and confusing.
There's another key lesson there. Clients who are compromised by stress can often act on suggestions without considering the qualifications of the adviser or jump to wrong financial decisions, particularly when they are newly single, Kaplan said.
"Widows and divorcees are often very insecure and they rush to pay off the mortgage, but if they have a very low interest rate, that might not be a good idea," she added.
"For me, it's about knowing who to tap to look at critical things like long-term care, which they may need now more than ever. It's also just about listening at a very emotional time.
"I'm not trying to pose as a therapist, but it's important to listen to their concerns."
