Helping widows

Despite an avalanche of media attention, advisors are still encountering women who have been left out of the financial loop.

This becomes particularly evident soon after they’re widowed. Sometimes wives left decisions to the husband; other times men insisted on control. Either way, we’re still seeing widows who are left confused, and without sufficient income to maintain their lifestyles. And this has to change.

Here’s an example. Derek was never a client of mine but I had to clean up his mess. An engineer by training—who thought he knew it all—he amassed an all-equity portfolio through several brokerage companies and mutual fund firms, almost all in RRSPs. When he died, his spouse, Susie, had several small RRIFs and a modest teacher’s pension to live on.

Records were a mess. He had his own fi ling system; I couldn’t figure it out. And he’d saved every piece of paper ever sent by his mutual fund companies. It took years to sort. Susie hadn’t a clue and told me Derek would try to stop her having access to her bank book, and controlled everything.

After three years, we’ve finally managed to get accounts into her name, but it’s hard to educate someone in their 70s on financial fundamentals. She had no idea what her monthly expenses were, and was a soft touch for all three of her children.

A good investment counsellor would have made the most sense for her holdings, but getting her to interview candidates to find the right fi t, and to educate her in the proper terminology, was a daunting task. Right now, she’s working with some investment advisors who find her difficult to deal with, but the money is finally being managed.

Dealing With Debt More recently another of my clients died—a delightful man who had been self-employed for many years. He was not, unfortunately, too successful and kept running up debts with the CRA and on his credit cards. The house he left his widow is large—and his wife always resisted suggestions they sell it and buy something smaller because she feared he’d plough any profit into his failing business. So, instead, they kept refinancing.

All her income went to pay the mortgage and property taxes. Everything else ended up on credit cards and lines of credit. There was some life insurance, but after paying off her husband’s debts (many of which she knew nothing about), she was left with $100,000 to support her until she could get rental income from her house. She’s okay with the idea of making the house work for her and is in the process of making upgrades to allow this. She’ll get by, but again this isn’t exactly ideal.

I have male clients who are earnestly concerned about what will happen after they die. Quite often they’ve made all the investment decisions in response to a lack of interest on the part of their wives. But what advisors don’t like to talk abut is how hard it can be to get these women to participate after their husbands’ deaths.

The death of a spouse exposes planners to so many emotions. The grieving process lasts a long time, and some women will immediately want to sell their homes and move. Talking them into not making these kinds of drastic decisions for at least two years is sometimes a challenge. But there’s nothing harder than seeing a situation where provisions for a spouse are completely inadequate and there’s no choice but to sell the family home and move.

As fi nancial advisors, it’s our job to work with families and make sure proper provisions are made for the surviving spouse. But there’s little we can do if we aren’t consulted, and little we can do if the clients don’t want to take our advice.

That being the case, ask questions early, assess situations quickly, and be prepared to step in and solve the problems that too often leave widows out in the cold.