From the October 2013 issue of Investment Advisor • Subscribe!

Suddenly Single in a Financial Fog

Many newly widowed or divorcing clients seem as dazed as deer in the headlights. Here’s how HMS Financial’s Barbara Shapiro helps them make better decisions

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You’ve heard me lament that women’s financial sophistication doesn’t seem to be improving. In a 2013 Allianz study, twice as many women as in 2006 (62% versus 35%) said they were interested in learning more about financial planning, retirement planning and investing. Yet 70% said financial information was hard to understand, compared with only 44% in 2006. It’s no wonder that women are twice as likely as men to report high or overwhelming levels of financial stress, according to Financial Finesse.

What we’ve got here, as Strother Martin told Paul Newman in “Cool Hand Luke,” is failure to communicate. Its consequences are shockingly apparent when women who relied on the financial savvy of others are all of a sudden on their own.

One advisor who focuses on helping this type of client is Barbara Shapiro, president of HMS Financial Group in Dedham, Mass. Besides holding CFP credentials, Shapiro is also a Certified Divorce Finance Analyst (CDFA). Reading an article she recently wrote for attorneys, “Dealing with the Financially Unsophisticated Spouse,” I realized that anyone who deals with divorcing or widowed clients needs to understand how to reach this audience.

Olivia Mellan: Are we mostly talking about women here?

Barbara Shapiro: Typically, yes, but anyone who has abdicated their financial responsibility to somebody else is the subject of my article—anyone who is now trying to make rational decisions without any information. This applies not only to divorce, but to anyone who needs to make financial decisions and doesn’t know where to start: widows, people who have inherited a lot of money. We try to educate everyone who walks in here, but people in the process of divorce have that extra layer of anxiety.

OM: What’s going on in these folks’ brains?

BS: Dr. Daniel Goleman, a psychologist, journalist and author of “Emotional Intelligence,” coined the phrase “amygdala hijack” for when a person’s inappropriate emotional response overrides their general intellectual functioning. That’s when they get that glazed-over, deer-in-the-headlights look we’ve all seen. My article focuses on how to deal with it.

OM: What’s your first step?

BS: The first step is to relax them so I can get a feel for their baseline comfort level. In our office we have lots of things that people can relate to like Disney cels, Red Sox memorabilia, model cars, baseball stadium models and Fazzino 3D pictures. Our focus is on helping the client relax and feel comfortable, so we spend a lot of time at the beginning chitchatting. When we feel they are ready to move on, we finally ask, “How can we help you?”

We never send preprinted questionnaires in advance. There are certain questions we want to ask, but we write things down the old-fashioned way. With divorcing clients, I don’t take any notes. It’s a way of trying to establish an interpersonal conversation.

OM: What have you learned about people’s attention span as far as integrating new information?

BS: The average attention span is about 45 minutes, but with these deer-in-the-headlights folks it’s much shorter. In client meetings, keep monitoring when they are saturated. Sometimes they’ll say, “I’ve had it,” but even if they don’t, their body language­—fidgeting, looking around the room, etc.—makes it inordinately clear. You might revert then to casual chatting for a while, offer the client a soft drink or take a bathroom break.

If a couple comes in where both people are on board, you can accomplish a lot in one meeting. With someone who’s unsophisticated or frightened, I typically plan on taking three meetings to accomplish the same thing. It takes a lot of patience, educating and reassurance that financial expertise is not intuitive.

OM: Many women say learning about money is boring. They want information that’s simple to understand. Do you take this into account?

BS: I often tell clients that if they’ve run a household, it’s a lot like running a small business. There are certain things we need to communicate, but we use examples rather than just facts and figures. For instance, instead of talking about a 3% rate of inflation, I talk about seeing that the price of milk has gone up from $3.50 to $3.60.

OM: Tell me about what you call the “Circle of Support.”

BS: This is an arrangement with the client in the middle and all the professionals they may need around them. In a divorce situation, you might have a therapist, the attorney, a mortgage broker and the CDFA. This community of experts should interact among themselves for the benefit of the client. Obviously, the client gives them permission, but they function like a team. Each one will talk to the client about their specialty and will communicate on whatever level is necessary for the client to understand the choices they need to make.

That means the client can call the mortgage person to find out whether they should refinance. Or the mortgage broker or the CDFA might say, “Let’s call the CPA so we know what your total tax situation looks like.” And of course, what may be right from a financial perspective needs to fit into what the attorney’s strategy might be.

In the meantime, the client is interacting with all these people and hearing the same information from each person in a slightly different way. Hopefully it will resonate with them so they make a better-informed decision.

OM: You’re saying that without this reinforcement, a client might zone out and miss or mishear important points?

BS: I’ve had people come into my office—bright, articulate people with this amygdala hijack issue—who are convinced their attorney told them things that I am sure no attorney ever said, such as “I can live in the same house as my ex even if he’s paying alimony” or “I’ll get 100% of his Social Security when he retires.”

OM: What do you do about these false beliefs?

BS: You correct them, patiently, but what’s scary is if they are going around telling their friends that their lawyer or their advisor said such-and-such. The Circle of Support can correct this kind of misinformation.

The other thing is that many professionals aren’t aware of different learning styles. There have been times when we are seeing a couple and I’ll interrupt the proceedings because I notice one of them has a question. When I saw their eyes going back and forth over the same lines, I knew they weren’t getting it.

When someone is stuck, the challenge is to communicate simply and effectively to them without infantilizing.

OM: How do you do that?

BS: You say the same thing patiently in many different ways. Or leave the topic for a while and keep going back to it until you’re comfortable that they’ve internalized it. 

OM: In your former life you were an educator who taught math to language-impaired kids. Do you think financial planners without these skills can learn how to tune into their clients as you do?

BS: It will take some practice, but if they look at their work from a process perspective and not a product perspective, they can learn how to track their clients better. They need to learn to put themselves in the client’s shoes.

It’s like going to a doctor and getting a diagnosis you don’t understand. The doctor has to find words you can understand for your condition. And you, the patient, need to provide your own input into treating what you have. The days of a doctor—or a financial advisor—giving a Sermon on the Mount are long gone.

OM: Can you give an example from your practice?

BS: I worked with a divorcing client whose husband was a high-powered portfolio manager. She had a choice of whether to take a buyout payment or a percentage of his annual bonus. When she asked me what I would do, I told her I would take the buyout, but it was her decision. She said, “I know how big his bonuses are. I’d like to choose the bonus.” 
Everything went fine until the market crashed and there wasn’t any bonus. The client told me, “I used the bonuses to pay my share of the kids’ college tuition. Now I’ll have to take the tuition out of other savings. But it was my decision, and I guess I goofed.”

OM: Studies show that the financial literacy gender gap is widening. Has this been your experience?

BS: I’ve encountered some younger women who aren’t interested in learning about money. They could easily find themselves behind the eight ball one day.

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