This Top-Ranked Advisor Has Never Been Fired by a Widowed Client

What’s the fastest way to lose a widowed client right after her husband’s death? Rush her into discussions about the investment portfolio.

“Having peace of mind is the most important thing to most widows, as opposed to [her advisor] scrutinizing how her investments are performing relative to some index,” says Spuds Powell, managing director and financial advisor at Kayne Anderson Rudnick, in an interview with ThinkAdvisor.

In Powell’s 17 years as an advisor, and working with many married clients, not one woman has moved her assets from his management after her husband dies.

Today, the Los Angeles-based advisor and his team manage $2.3 billion-plus in client assets. Twenty-five percent to 30% are single women. Of these, about 75% to 80% are widows.

“It’s a mistake” when “advisors lose sight of the importance of focusing first on the surviving spouse and putting in the time to earn their trust and confidence,” says Powell, 50, ranked No. 1 on the Barron’s Top 100 independent financial advisors list for four consecutive years and on Forbes’ list of the Top 100 Wealth advisors for several.

In the interview, he reveals his process for retaining widowed clients, which starts with assuring the women that he’s their “advocate and a shoulder to lean on and cry on,” he says.

Powell’s average client has about $13 million in assets invested with him, some, as much as $200 million. His minimum: $5 million.

Among married clients, a husband’s death “creates a lot of fear and anxiety” for the widow, who is “totally intimidated and overwhelmed at having to take responsibility” for her finances, especially women who have had “little or no experience” managing them, Powell says.

Seventy prevent of the widows he serves are in that category.

The advisor’s process includes providing the women with a “Surviving Spouse Check List” of steps to take and when to take them.

He also prods the widow’s estate planning attorney, accountant and other advisors to promptly carry out their responsibilities. 

Another tack is bringing in the immediate family to orient them financially: “The widows love” when he meets with the children and grandchildren, he says.

Early in his career, Powell was with Franklin Templeton Funds and Retirement Plan Strategies Group before joining Financial Engines — the firm co-founded by Nobel laureate Willliam F. Sharpe — where he worked in sales and client services.

After four years, he decided to switch professions and became a financial advisor at KAR.

ThinkAdvisor recently interviewed Powell, who was on the phone from Los Angeles. We couldn’t help but ask: How did he get the name Spuds?

Answer: “I was conceived in a potato field in Ireland. One of my dad’s buddies started calling me Spuds before I was born.

“A bunch of my parents’ friends began referring to me as Baby Spuds after I was born. My formal name is Caleb, but I’ve never gone by Caleb. 

“It’s always been Spuds.”

Here are highlights of our interview:

THINKADVISOR: What’s the most challenging part of working with widowed clients?

SPUDS POWELL: I don’t know if it’s challenging; but it does require a lot of patience and time, particularly early on.

My guess is that a common mistake advisors make is to try to rush the process. There’s a lot of paperwork involved and a lot of compliance and operational work.

I suspect that many advisors make the mistake of trying to execute all that as quickly as possible and lose sight of the importance of focusing first and foremost on the surviving spouse and putting in the time and effort to earn their trust and confidence to develop a strong rapport.

Among your married clients, no widow has ever moved their assets to another advisor. Research shows that 70%-80% of widows leave the couple’s advisor after the husband’s death. What’s your secret to retaining them?

In most cases, I’ve had to focus much more on the softer side — the emotional or qualitative side — rather than the quantitative and numbers side.

I’ve had to ensure that the surviving spouse was very comfortable going forward.

What’s your specific approach?

It’s a process. Step No. 1 is that I make very clear how much I care for the widow and her well-being and that I’m there to help in any way I can to walk her through the grieving process.

An essential part of developing a really deep relationship is earning the widow’s trust and confidence, for her to know in her heart and soul that I care for her and her family.

Having that peace of mind is the most important thing to most widows, as opposed to [the advisor] scrutinizing how the investments are performing relative to some index. 

I’m there along the way as the widow’s advocate and a shoulder to lean on and cry on.

But when does the “numbers” aspect come in?

I gradually help them realize and understand what investment-related or finance-related issues they need to focus on and the steps they need to take. I make it very easy for them to address many of those tasks.

To what extent did your widowed clients play a role in the couple’s financial decisions before their husbands’ death?

Probably 70% had very little, if any, involvement with the family’s financial affairs and the ongoing meetings about them [that I had with] the husband.

In most cases, the husband’s passing created a lot of fear and insecurity for the widows.

They were totally overwhelmed and intimidated by many things, including having to take responsibility for their financial health and well-being after having had little or no experience doing so.

How do you usually learn of the husband’s death?

Even when the wife wasn’t actively involved with the conversations I had with the husband, I’ve always been able to develop great relationships with both the husband and wife. 

So when the husband passes away, I’m typically notified by the widow.

What’s the first thing you do?

Empathize and show how much I care and how genuinely interested I am in trying to do everything I possibly can to help her cope with what she’s going through.

I try to eliminate stress and anxiety by describing what financially related things she needs to deal with later and not worry about them now as a top priority.

How else do you develop strong trusting relationships with the widows?

By giving them information and helping them understand what differentiates successful investors from the masses and also communicating with them in a way they understand and feel comfortable with.

I educate and empower them so that insecurity and fear transitions to confidence, knowledge and peace of mind.

You mean that these widowed clients felt financially insecure even though they had millions in assets?

In some cases. It was primarily because they weren’t intimately familiar with their financial situation; and at a time when they were vulnerable and grieving, they made the mistake of assuming that financially they weren’t in as strong a position as they actually were.

But more so, the insecurity was driven by, “Oh my God! Now I have to deal with all these financial and investment-related issues — and I don’t have a clue how to do it.”

Is portfolio rebalancing ever appropriate?

Sometimes, when the husband passes away, it makes a lot of sense to change the asset allocation strategy; for example, when the surviving spouse wants to start taking regular monthly withdrawals from the portfolio. 

Maybe before the husband’s passing, they didn’t need to do that.

What’s something you do to guide the widows as they go along?

Provide them with a “Surviving Spouse Check List,” which I created years ago. It maps out in great detail the steps a widow needs to take and a timeline for when to take them. 

That’s very comforting and reassuring.

Anything else for the new widow? 

I want my clients to understand that I can take on the responsibility and burden of doing some of the things that under other circumstances, they would be responsible for.

So I host a meeting with the widow’s estate planning attorney, accountant and other advisors they may have to create an environment where everybody knows what their responsibilities are and what the expectations are for work turnaround.

I want to be the person who’s nudging the other advisors and motivating them to follow through on their commitments in a timely manner.

What comes next?

I always offer to meet with the widow’s children and, in some cases, grandkids, to get them involved with our conversations and educate them about Investing 101.

The widows love that. They really appreciate that I’m treating them as a family, whereas when the husband was alive, he was, maybe, my primary [only] point of contact. 

Are most of the widows retired?

Most of my clients are either approaching retirement or in retirement and on average, have about $13 million invested with us and focused on protecting what they have during tough times and trying to eke out every ounce of positive return during good times.

As wealth managers, what’s your firm’s biggest strength?

Our ability to play great defense in a lousy market, protecting clients’ capital when times get tough, during the inevitable recession and bear markets.

In what way do you do that?

We’ve developed a stock-picking methodology that has proven to be excellent at identifying companies that outperform the broader markets quite significantly during difficult times.

They’re all very profitable and typically have no debt or very little. They generate a lot of cash flow, tend to dominate their industry and have great management teams.

Are the portfolios concentrated?

Yes. Most of the equity exposure we manage is in individual stocks. Our typical stock portfolio has between 25 and 35 companies. But we supplement that with allocations to mutual funds or index funds, as appropriate.

What’s the most significant aspect when selecting a company?

We [place] most of our attention on identifying companies that have clearly defined competitive market advantages that will enable them to dominate their industry going forward.

They have unique characteristics [allowing them to] fend off competition nipping at their heels and continue to generate fabulous corporate results over time.

Do you ever suggest alternative investments?

My clients tend to have between 5% and 25% of their portfolio allocated to alternative investments.

Before I ever recommend an allocation of one or more alternative investments, I thoroughly educate [the widows and other clients] about what they are and what differentiates them from traditional equity and fixed income investments.

Then, for the specific alternative investments, I clearly inform them about what those strategies mean and what to expect going forward.

Do you acquire clients mostly through referrals?

About 90% of my clients were referred to me, mostly by existing clients. The other 5% to 10% found me through the internet, mostly by seeing my Barron’s or Forbes [top] rankings.

Did you set out to specialize in helping widows, or did that just evolve?

It evolved. It wasn’t [a niche] that I made a conscious effort to target. 

Once I started to have success, I found that a number of widows I was working with were referred by other widowed clients.

Also, often widows get involved with organizations or groups as part of their grieving process. They get to know other widows who have been through it. And that’s where referrals come from, too.

Pictured: Spuds Powell, managing director and financial advisor, Kayne Anderson Rudnick