You’re Fired! It’s Not Me; It’s You.
Why is it that, when women become widows, up to 70% of them fire their longtime financial advisors within a year? According to a study by Fidelity Investments , 60% of the total personal wealth in the U.S. is controlled by women. However, it appears to be counterintuitive that so many widows would systematically say goodbye to their advisors at a time when advice is needed the most.
The answer lies in several key reasons. For example, wives often say that, during meetings with both spouses, advisors don’t listen to them or are condescending; many women report feeling undervalued or that their advisors don’t understand their needs. They notice advisors talking but looking only at their husbands for entire meetings and not interacting with them at all. It’s difficult to believe, but this kind of behavior is still going on.
Even more difficult to believe, the survey also found that, when both husband and wife seem to interact well with a financial advisor, the husband is 58% more likely than the wife to be the primary contact. It seems from the survey that men are more likely than women to have faith in their abilities to serve as financial decision-makers. Wives reported greater faith in their husband’s abilities than in their own.
One fee-only advisor shared this story: “I work with some ladies whose husbands are alive and well, and they told me that, when they meet with their advisor, the ‘professional’ barely acknowledges they are in the room. And they are not invited into the discussion about THEIR family finances.” This helps explain why, when male clients pass away, their widows are likely to fire their advisors. It’s easy to feel empathy for these women and to even agree with their decisions.
Consequently, the women who feel that their advisors neglected them while their spouses were alive are the most likely to terminate the client-advisor relationship after the spouse’s death.
That’s why it is so vital that both spouses be involved in all financial planning and wealth management meetings with their advisor, even early on in the working relationship. Financial advisors should insist on meeting with both the husband and the wife; otherwise, they are doing the clients a disservice and may harm them both. This is a crucial reason—perhaps the most important one—for both spouses to build a relationship with their current advisors and to attend each meeting together. In most cases, the wife is more likely than the husband to make day-to-day financial decisions in the household, which is why wives are frequently called the chief financial officers of families. Even though women make most decisions on budgets and savings, they often pass the investing decisions on to their husbands because they are not knowledgeable enough, are not confident enough, or simply are not interested. Some industry experts say that this is a myth.
However, it is also possible that a widow may prefer to work with a female advisor, which, if the current advisor is male, may be the main reason for a firing. A Charles Schwab study found that 87% of high-net-worth women actually are not partial to an advisor’s gender; however, they may prefer older or younger advisors. Lest we forget, some women feel more comfortable with independent, fee-only financial advisors than with ones who are affiliated with large Wall Street firms.
The bottom line is, “It’s not about the bottom line.” Widows are not necessarily leaving their advisors because of poor investment returns or a dislike for nonstop technical jargon; they are leaving because they are looking for more collaborative relationships and a bit more respect. Considering that women live an average of 14 years after their husbands die, they need either a hefty degree of confidence to manage their money alone or, better yet, the conviction to work with a trusted and skilled fee-only advisor.
