Working With Widows

It shocked me to learn recently that widows are one of the fastest-growing segments of the U.S. population. The Census Bureau says they numbered almost 12 million in 2011, and their ranks are growing by nearly 1 million every year.

According to Texas Tech Associate Professor Brian Korb, seven out of 10 baby boomer wives are going to outlive their husbands. Many widows will be dual inheritors, receiving money from their parents as well as from their spouse. Clearly, it’s in an advisor’s interest to work well with this group. Yet 70% of widows are unhappy enough to fire the couple’s advisor after their husband dies, according to 2011 Spectrem Group research. Kathleen Rehl believes there’s a simple reason for the high abandonment rate: “Many of these advisors are very competent, but they never had a relationship—or a strong connection—with the woman in the couple.”

She’s working hard to help more advisors bridge the gap. The author of “Moving Forward on Your Own: A Financial Guidebook for Widows,” Rehl has been a financial advisor for 17 years and is a widow herself. Now the president of Rehl WEALTH Collaborations LLC in Land O’Lakes, Fla., she has relinquished her RIA hat to focus on assisting widows and their advisors. In view of this client segment’s growing importance, I recently asked her what advisors need to know to serve widows better.

Coping With Shock and Paralysis

Rehl was only 60 when her husband, Tom, died in 2007. She was mentally and emotionally devastated. “I couldn’t remember information,” she told me. “Couldn’t remember where I put the car keys. Filling out a form, I couldn’t remember my Social Security number.” Despite her financial expertise, she even briefly feared becoming a bag lady. “I literally thought I was losing my mind.”

Early in widowhood, this very competent financial planner felt totally incapable of helping herself. “I didn’t realize what happens to a widow’s brain in early grief,” Rehl said. Eventually she was able to compose herself, do some financial calculations, talk with her own advisor and realize she was going to be okay. This enabled her to resume normal functioning as her clients’ advisor.

The experience changed her professionally as well as personally. “By the end of the first year after Tom died, I realized I wanted to help my widowed sisters who were going through this traumatic life transition,” she explained.

The Three Stages of Widowhood

Rehl has identified three phases that a widow typically goes through after losing her husband: grief, in which she feels numb; growth, when she journeys back to the world; and a transformation that Rehl calls “grace.” She defines these phases as “Taking care of me,” “Taking care of business” and “Taking care of more.”

In the grief phase, financial triage is necessary. “She needs to be heard and understood,” Rehl said. “She’s highly vulnerable, partly because her thinking is impaired.” During this phase, widows may make a hasty decision to sell the house and move near their adult children, or let a financial salesman talk them into investing the life insurance proceeds in something they don’t understand or need.

No big irrevocable decisions should be made in this phase, Rehl said. The widow should be focusing on her cash flow: the sources of money coming in and the bills that have to be paid. In addition, she should be filing for pension, Social Security and life insurance benefits, and verifying her health care coverage. (Rehl’s book includes a more complete list of financial steps like these for new widows.)

Progress in moving forward can be gradual. On some days, the widow may feel she’s taking two steps forward and one step back. On other days, it might be two steps forward and three steps back.

The circumstances of the death can also affect the length of the grief phase. Rehl said, “I received an email [concerning] a widow whose husband died suddenly three days before Christmas. That woman’s grief may be very different from [the emotions of] another widow whose husband was sick for a long time.”

During this phase, an advisor’s role is chiefly empathetic listening. The widow’s main concern is “Am I going to be okay? Do I have enough to live on?” In Rehl’s experience, virtually every widow has bag lady fears in this stage.

In the growth phase, the widow’s cognitive functions return to normal. “This is the time for general financial planning—investments, taxes, pre-retirement or post-retirement decisions and basic estate planning,” Rehl said.

Discussions may focus on whether the widow will stay in her home or not. A younger woman with children still in school may feel that remaining in the family home is important. An older widow may want to leave a place where there are too many memories of a beloved spouse, while some others find comfort in this.

During the growth phase, an advisor should consider serving as a “thinking partner” to help the widow sort through her choices. Empathetic listening is crucial in this phase, too. But whereas in the grief phase she may have nodded without hearing or understanding a word you said, now you can make suggestions and find her ready to hear and understand them.

When a widow moves into the grace phase, Rehl said, “she’s finding purpose and fulfillment in her own independence. It might be through her work or her family, community involvement or spiritual deepening. I didn’t begin this phase until several years after Tom died.”

During this phase, advanced estate and charitable planning is finally appropriate. You might help her focus on special family issues, such as setting up an education fund for the grandkids or helping an adult child with a business venture. “This is when sharing her story, her life lessons and her legacy with her loved ones is appropriate,” Rehl said.