Mark Colgan, a CFP in Rochester, New York, says it's common for widows to fear the money won't last. Many of them went from their father's home to their husband's home, and at the age of 65, are forced to be financially responsible for themselves for the first time in their lives. "Advisors need to understand that widows have an unusual fear of running out of money, because now they're dependent solely on themselves," Colgan said.
Colgan understands the widow psyche more than most. He's a widower himself. Colgan lost his wife two years ago to complications from a congenital heart condition. She was 28. A financial planner with years of experience, Colgan said even he had a hard time managing his financial affairs after his wife died, mostly because he couldn't concentrate.
Colgan says during that first painful year, he sought resources and information on how to handle various aspects of his wife's death, from finances and insurance to paying for the funeral. There was nothing to be found. He decided to write down what he learned, should his clients find themselves in that position. Colgan says the attorneys he worked with were so impressed with his makeshift manual that he decided to publish it. The second edition of his book, entitled The Survivor Assistance Handbook: A Guide for Financial Transition, came out in February, and the book is already selling in 30 states and being distributed by a dozen hospice associations.
The book explains how to deal with issues as basic as protecting against burglary during the funeral, cashing in on a life insurance policy and how to collect Social Security. There's a chart to fill in the household budget. There's another page to write down where the will and safety deposit box key are located.
Colgan has become a student of the widow market and can reel off the statistics: The average woman is widowed at the age of 56. Half of all women become widowed by 65. And nearly 75% of widows now living in poverty were not poor when their husbands were alive.
"The advisor really needs to understand what's going on in their lives, to take a holistic approach," Colgan says. "I don't just tell them about the portfolio. I ask them how they're doing otherwise. Are their household expenses under control? Have they found someone to do the yard work? Is someone talking to them about their credit cards?"
His sympathetic approach has paid off. Half of all new clients are widows, and most are sizable accounts. That figure used to be about 5%. Colgan says a man, whose wife is still alive, recently heard about Colgan's book and gave him $1 million to manage because he liked Colgan's positive attitude. "They're entrusting me with everything," Colgan says. "They feel comfortable with me."
Colgan says he's concerned about widows, though. Some can end up with a bad advisor and not even realize it. One woman came to him last fall after losing $100,000, and her portfolio still had a healthy concentration in technology stocks. And the rest of her investments were not very well diversified across asset classes. "It's a vulnerable position for them to be in," he says.
It's no wonder that widows are vulnerable-many don't trust their own judgment. Sandy uses the transitive theory for financial advice: If her friend, Jimmy, finds someone trustworthy, and she trusts Jimmy, then whomever Jimmy uses must be trustworthy. He'd better be; she's going to rely on him for a lot.
"I want someone who can do it all for me because I don't want to have to think. I'm not interested in understanding finance," Sandy says. "I want someone who will take care of me."