No, 70% of Widows Aren't Firing Their Advisors

New research from Kehrer Group, a consulting firm, and RFI Global, a data insights firm, suggests that a much smaller portion of widows drop their advisors.

"We found that 13.7% of recent widows had fired or changed their advisors. A lot fewer than 70%," Ken Kehrer, Kehrer Group's co-founder, and Luke Allchin, RFI Global's director, North America, wrote in a recent post. "On the other hand, 4.7% of other households fired their advisor in the past two years, so widows are almost 3 times more likely to move on from the family's advisor."

Kehrer and RFI looked at data for women who had been widowed over the past two years. They used RFI's data on consumer financial decisions, which is based on large-scale household surveys.

"No one questioned this for years," Kehrer said in a phone interview Monday. "The data do show that widows are more likely to leave their advisors than other people," so it's not bad for advisors to focus attention on that, he noted.

As for the 70% stat, an industry that "prides itself on accurate data and getting the story straight," including highly respected leaders and organizations, has passed along "this myth" for years, according to Kehrer. It's been cited in white papers, presentations and articles for over a decade, although the original research appears hard to pin down now.

Even if that figure is inaccurate by more than five times, Kehrer says, it's "no harm no foul" if it caused an individual advisor to focus more attention on a wife rather than just the husband in a client couple.

Given that widows are more likely to leave their advisors than are widowers, he said, "it's good to pay some attention to this, and probably before the husband dies."

Behind the Number

Kehrer became interested in the statistic a few years ago while researching gender dynamics in couples' financial decision-making. As described in his recent blog post, he and RFI went down a rabbit hole to chase down the many references and the exact source for the 70% figure.

Some articles published by financial services companies and industry thought leaders have mentioned this statistic by citing a 2011 study on "Wealthy Women Investors" credited to the Spectrem Group. But Kehrer and Allchin explain in their recent online piece that the original study is now out of print and they haven't been able to find any clear information on the study's parameters.

George Walper, former Spectrem president and currently managing principal strategic research at CEG Insights, its successor firm, said that the 70% data point is incorrect. Spectrem, he added, is not the source of this datapoint, and he's unsure where it originated. The idea that 70% of any group would leave their advisors is "absurd," Walper said in a phone interview Tuesday.

"I have no idea what study people are referring to, I don't know how it all got started years ago," Walper said. "We've never seen close to any numbers like that for anyone" changing advisors that quickly after a major life event.

Kehrer thinks the original study may have been misinterpreted and may have looked specifically at widows who became life insurance beneficiaries. It's also possible that the "advisors" cited in the study could have been life insurance agents — but, he emphasized, this is purely speculation on his part.

Kathleen Rehl, author of "Moving Forward on Your Own: A Financial Guidebook for Widows" and adjunct professor at the American College of Financial Services, says that regardless of the data point, anecdotes point to communication problems between some advisors and widows.

Rehl explained in a phone interview Monday that she's heard this type of feedback from women: "He just didn't understand me. He just wanted to talk about investments," or "My husband got his hot tips on the golf course with this advisor, and I really didn't know him."

Also, an advisor might have told a widow that she was beating the markets and wanted her to sign paperwork but never mention her late husband's name, Rehl said. Rather than a focus on beating the markets, widows "want to know they'll be OK."

'Wonderful Clients to Work With'

Today, more advisors than in the past advertise that they work with widows, said Rehl, who's among the industry pros who have cited the 70% figure.

"Widows are such wonderful clients to work with," she said. "You're doing a lot of emotional things and listening to her stories."

Advisors can help reassure and empower widows, she said, adding that they aren't looking to brag about their stocks at cocktail parties as much as they want to care for their families and include them in meetings, she suggested.

"Women like to learn; they like educational ventures," Rehl said.

While she doesn't know precisely how many widows drop their advisors after the death of a spouse, she said that Kehrer's finding that they're three times more likely than the general population to do so makes it "imperative" that advisors pay attention to different ways to serve them.

Rehl recommends using the "SAFE" four-meeting framework — stabilize, assess, focus priorities and empower. She also suggests that advisors become familiar with the "three stages of widowhood."

In the first four meetings, advisors should create calm and stability, clarify the new reality, identify what matters most and help the widow move forward.

"Don't rush her," Rehl suggests.

Instead, focus first on financial triage, making sure that bills are paid, locating assets and looking at cash flow. Later, advisors should assess the widow's tax situation and investments, focus on her priorities and help empower her with education.

At the initial meeting, talk about her husband or ask what she would like others to remember about him, Rehl advised. "Just talk about George."