Published April 10, 2014
The loss of a spouse is devastating and is often followed by the difficult task of sorting through complicated legal and financial issues.
According to money managers, widows face unique challenges when they are left taking control of the family’s assets. The process is always overwhelming, but becomes particularly challenging for women who weren’t actively involved in their household’s personal finances and retirement planning.
It is critical for the spouse to work with the right financial advisor to maintain a financially-healthy lifestyle and retirement security.
To help widows overcome their unique challenges and find the best money manager, Sacha Millstone, financial advisor with Raymond James, offered the following tips:
Boomer: How should I conduct interviews with perspective advisors and do I need to know how long they have been in business? What should you look for when interviewing a perspective advisor?
Millstone: Always meet with more than one potential advisor. You are looking for someone who understands your situation and with whom you have good communication. You want someone you feel comfortable asking any sort of questions you have. The financial advisory relationship is very personal - when you share all your financial information, you may feel vulnerable so trust is going to be critical. The more open you can be with your advisor the better. Knowing your worries and fears will help the advisor make the best financial plan for you. Keep all this in mind during the interview process and ask yourself, is this someone with whom I feel comfortable enough to share?
Ask if the advisor has clients in your situation. Have a discussion about others the advisor has worked with who have also lost a spouse. It is worth asking how long an adviser has been in business, but I think it comes down to situational experience. After all, what if the person had two years as an FA and previously was a CPA? That might be a wonderful background.
Boomer: What is the best way to do a background check on a perspective advisor?
Millstone: It can be costly to conduct a full background check, but a FINRA Broker Check provides a detailed report that shows all the places the advisor has worked, held licenses, states he/she are registered in, how long each license has been held, outside business activities and any complaints and/or resolutions. It’s not unusual for a professional to have a few complaints, but that doesn’t always mean the advisor was in the wrong. I would focus on what happened as a result of the complaints, and the report tells you these details.
Boomer: Should you ask the prospective advisor for references or is that too insulting?
Millstone: Absolutely ask for referrals. I would suggest asking for up to three referrals later in the conversation to give the advisor time to learn about you and select people for you to speak that are similar to you. Asking for referrals is not at all insulting. It is a normal part of doing business and I am regularly asked for referrals. Frankly, it never occurred to me to be insulted by this. I take it as evidence the person is very interested in working with me and I believe that once someone talks to my referrals they will be even more likely to want to do business with me.
Boomer: Can I use the internet to evaluate a prospective advisor? What is the best way to validate information?
Millstone: Before you go for your interview, gather information about the advisor via an internet search and the advisor's website. The website is going to have basic information such as the length of time the person has been in business, experience and education, the philosophy or approach the advisor believes in, and information about any specialties. You will begin to get a feel for the differences from comparing the websites.
Look for an advisor’s LinkedIn, Facebook or Twitter accounts, all of which can give you additional insights into who this person is and how they communicate. This gives you an excellent platform for a discussion - you will more easily come up with questions that are meaningful to you.
For widows in particular, they should look for any information or evidence that the advisor deals with people who have suffered the loss of a loved one. An advisor with special training and experience in this area may be a better fit. Is there any evidence that this person works with female clients extensively? Women and men often have different approaches to financial planning and investments - how well does the advisor understand this?