While it may not be surprising to find that half of widows feel emotionally unprepared when their spouse passes away … it is more surprising to find that half of widows feel unprepared financially. The lack of financial preparedness is surprising, especially among households with more than $1 million net worth.
In recent research conducted by Spectrem Group with more than 250 widows, 50 percent disagreed when asked if their spouse had made sure that they would be financially taken care of upon their death. But despite this feeling that their spouse had not prepared them, only two percent are worried about not having enough money to last throughout their lifetime. Clearly these women have identified what it is they need for their living expenses and more … either through self-education or relying upon someone else for advice.
In fact, 40 percent of widows indicated that they have educated themselves about investments and are very involved in making their own decisions. In fact, 68 percent of widows indicate they are fairly or very knowledgeable about investments. Financial advisory firms should take advantage of the desire of widows to educate themselves about investments. Spectrem consistently finds that women are more likely to read articles, attend seminars and participate in educational events than men. There is no reason this education couldn’t be available for both spouses, thus allowing them to feel more prepared upon the death of one of the spouses.
Eighty percent of widows have a financial advisor. A third of widows indicate that they rely upon their advisor to make sure they will have sufficient assets to last throughout their lifetime. When asked about their perceived reliance upon their financial advisor, a quarter indicate that they rely upon their advisor to make all investment decisions. Another 26 percent make their own decisions but are assisted by their financial advisor. Twenty six percent only use their advisor upon a major event and 22 percent are Self-Directed, meaning they make all of their own financial decisions.
It’s important that financial advisors work to form relationships with both members of any household. Being able to form a clear plan about what will happen upon one’s passing is the best way to ensure that the relationship continues. Widows are likely to want additional education once the event occurs. Advisors should always err on the side of additional communication. This is especially true soon after the spouse’s death. Reach out and communicate. By proactively discussing future plans, advisors can increase the level of trust within the relationship.
© 2018 Spectrem Group