New widows need “financial triage”: They’re traumatized, grieving, stricken with muddled thinking — and worried sick that they’ll outlive their money. They are in the first of three stages of widowhood, and the financial matters to be addressed in each are significantly different, says Kathleen Rehl, a leading expert on the subject, in an interview with ThinkAdvisor.
The newly widowed woman feels deeply insecure about her financial future. Thus, she needs an advisor with patience and compassion, not only technical proficiency, argues Rehl (www.Kathleenrehl.com).
Up to 70% of widows fire their financial advisors after the death of their husbands, according to a widely reported 2011 Spectrem Group research study, “Wealthy Women Investors.” Maybe that’s because the FAs bombard them with financial jargon they don’t understand and fail to listen to their deepest concerns.
Rehl has not only researched and analyzed widowhood; she’s experienced it herself. Husband Tom, a pastor, died of cancer 12 years ago, two days before Valentine’s Day. She’d just turned 60.
Rehl divides widowhood into three distinct stages: Grief, Growth and Grace. Above all, advisors must recognize the widow’s overarching need: to feel safe and secure about her financial future.
Author of “Moving Forward on Your Own: A Financial Guidebook for Widows” (Rehl Financial Advisors, 2010; paperback 2018), written for professionals to give to widowed clients, Rehl is a former 17-year FA with her own firm. Five years ago, she sold the practice to focus full time on helping advisors help widows.
Through Rehl Wealth Collaborations, the certified financial planner presents at industry conferences, conducts FA workshops and performs scholarly research studies, like “Widows’ Voices: The Value of Financial Planning,” published in the Journal of Financial Services Professionals in January 2016.
Sponsored by Protective Life Insurance, a life insurance and annuities company, she speaks at meetings held by firms including Allstate, Janney Wealth Management, LPL Financial, Securities America, Raymond James and Voya.
In the interview, Rehl discusses the three stages of widowhood and how advisors can work best with women during that journey. Broadly, this requires superior listening skills, a high level of empathy and knowing how to correctly pace the financial planning process.
Before becoming an advisor, Rehl, who is a faculty member of the Sudden Money Institute, was a university professor teaching education.
In her practice, highly aware that holidays are sad for widows, Rehl, at Valentine’s Day, held a “ladies-that-don’t-have-hubbies-to-hug” event — as she puts it — at which the women would talk about Valentine’s Days past and do a bit of financial planning to boot.
ThinkAdvisor recently interviewed Rehl, on the phone from her office in St. Petersburg, Florida. She discussed the best approach to serving widows, as well as furnished critical advice for the woman alone based on one personal bitter dating experience.
Here are excerpts from our conversation:
THINKADVISOR: What are the three stages of widowhood, and how can financial advisors help during each one?
KATHLEEN REHL: No matter what stage she’s in, the widow wants to feel financially secure. In the first stage, “Grief,” the main thing advisors can do is financial triage. The widow needs to be heard and understood because it’s such a very vulnerable time and one when she shouldn’t make any major decisions.
Don’t [immediately] invest her life insurance benefits because she really doesn’t know what she needs that money for. She hasn’t had time to think out what her life is going to look like. She’s just living day by day.
What should the advisor focus on, then?
The widow’s immediate needs and making sure the bills are paid, doing estate settlement work, looking at cash flow. You’ll do a broad-brush overview of where the assets are. Often the widow doesn’t know where her investments are or why they’re there. So you’re looking at where things are, but you’re not moving things around.
You call Stage 2 “Growth.” What services should the FA provide?
General planning. This is when the widow’s cognitive functioning has normalized and she’s thinking OK again. She’ll probably be finishing up those things she started at the end of the “Grief” period. Here, the advisor is doing basic estate planning, looking at her investments and tax rates for pre- and post-retirement.
How long does it take to progress from “Grief” to “Growth”?
Sometimes a widow will move one step forward and two steps back. The amount of time depends on lots of things, such as circumstances of the husband’s death. For example, one client of mine whose husband suddenly died of a heart attack on the tennis court, took almost a year to go from “Grief” to “Growth.” If it isn’t a sudden death, the widow does some of her grieving in advance. Another client, for instance, whose husband had Alzheimer’s, took about six months because his death was anticipated.
How else can advisors help in Stages 1 and 2?
I encourage them to be the widow’s thinking partner — instead of telling her what to do. They should help her with the follow-up of their recommendations and suggestions. And because the first time the widow goes to her estate attorney to settle the estate can be very emotional, a compassionate advisor will go with her.
Stage 3 you’ve termed “Grace.” Tell me about it.
Some people call it “transformation.” That’s when the advisor can do advance financial planning. I call it “redesigning your life” or repurposing it. The widow is going to make new friendships. It’s when advanced estate planning and charitable giving can be done. She may be starting up a business. Maybe a new romance will happen. If so, the advisor will want to talk about a prenuptial agreement.
So the “Grace” stage can be pretty great?
For the woman who makes it into that third stage and for the advisor who can help shepherd her, it’s a very rewarding, beautiful thing. Once the widow “gets” that the advisor understands her, that they speak the right language and know how to communicate with her and has her back, she’ll will be with them forever.