Janice and Kerry are both retired professionals in their late 70s living in upper-middle-class Northeastern suburbs. Both were married to professional men who were not financial advisors but took great interest in the markets and investing. Both men managed the investment portfolios and did pretty well by all accounts. Janice’s husband Jerry did the taxes each year and was an early adopter of online account management and trading—comfortable with computers as an engineer with IBM. Kerry’s husband Kevin was an attorney in private practice and often counseled friends and relatives about investment strategies, eschewing financial advisors in favor of online platforms.
Neither Janice nor Kerry was ever much involved in the family financial affairs. As Janice told me, “We divided and conquered. He worried about the bills and the investment accounts, and I was the doyenne of our family’s health care.”
Within a few months of their husbands’ deaths, the widows could not have been in more different circumstances. Janice and her husband had the “benefit” of his cancer diagnosis, and the estimate of three to four years to live. Janice quit her job and became a full-time caregiver as the disease progressed. Ultimately, they would have seven years more together, no doubt due in part to her devoted attention. During that time, Jerry and Janice worked closely together to ensure her ability to carry on after his death. Janice learned the checkbook, how to view and manage the accounts online—and even mastered the 1040 form. Jerry was also a handy guy, and one of Janice’s greatest memories is how she built a wooden crib for their granddaughter while Jerry looked on and provided instructions.
Kerry was in a different place altogether when Kevin succumbed to a heart attack. The sudden death left her first in shock. As she began to understand her new life circumstances, she immediately realized she didn’t know exactly where her money was or how to get to it. She was rummaging through drawers in her husband’s desk, searching an array of file folders and puzzling over how to access online accounts. She was not aware of any human financial advisor, though she found statements from one of the online platform companies and scanned the website for information. A notice on the site offered help with the death of a spouse, but her first call resulted in being kept on hold for 40 minutes. Making matters worse, Kevin’s regular taxable accounts were listed in his name with no named beneficiaries or instructions to “transfer upon death.” The custodian placed a freeze on the assets pending delivery of a death certificate. All of this was a foreign language to Kerry. She was now alone and unsure of herself and did not know where to get help. She kicked herself for not knowing more.
Jerry had not ever really talked to the financial advisor assigned to him by the brokerage firm he used. But after his diagnosis, he and Janice made an appointment to meet an advisor, Anne, to see if she could be of assistance. Immediately connecting with Janice, Anne went right into “full protection mode” and began to lay out the steps needed to transfer assets and decision-making authority. The adult children were eventually made aware of the plan and how Janice would work with Anne. Janice made some provisions for her children and grandchildren and added transfer and beneficiary instructions to her accounts. She and Anne maintained confidentiality of some aspects of Janice’s investments—Janice did not want her children to know how much Jerry had saved.
Kerry soon had more “advice” than she needed (or wanted). The attorney was helpful with the will and related estate issues. But it was up to Kerry to contact the banks, brokerage firms, even utility companies with death certificates and instructions. Each was a chore and most of the companies made it difficult, it seemed to her. When she finally connected with the primary brokerage firm and got to a local branch office, she spent almost an entire afternoon with “re-registrations” associated with Kevin’s accounts. Compounding her concerns about managing now on her own was information she sought from the brokerage firm’s “estate planning” telephone center, which gave her incorrect information about how a revocable trust in Kevin’s name would be valued at his date of death and then “rolled” into another trust in her name. Kerry was exasperated. Adding to her stress, her son began pressuring her to move her accounts to his advisor at a national brokerage firm in the city where he lived 200 miles away. Her daughter balked, and warned Kerry that the son would try to “control” her finances. Where to go?
Not long after Jerry passed away, Janice changed their approach to investing. Jerry had been entirely self-directed and therefore pretty much off the radar screen of the brokerage firm where he held most of their assets. His IBM retirement plan was now distributed and provided additional liquidity. Her first purchase was a long-term-care insurance policy to help leverage her savings. She also bought an annuity to provide immediate income on a more predictable basis. Not comfortable with Jerry’s equity investments, she opted for a managed account with a focus on growth and income. “I first wanted stability and to organize my financial life—and reduce the trouble for my children,” she shared, adding that “Jerry would never have bought these products, but they give me peace of mind and I have other things to do with my time.”
There are four key transitions of aging—where you live, your health care, how you get around and who makes the decisions about your finances. All four of these transitions are inevitable, but not unmanageable—if you plan for another inevitability, which is that you won’t live forever. Neither Jerry nor Kevin had made specific plans for how their wives would manage after their deaths (or incapacity, which is a whole other ball game). Jerry was “lucky” to have time to work with Janice before he passed. Kevin was not. Taking the time to consider the plight of your spouse or partner and family is an often overlooked aspect of planning. Mortality is a tough reality to face, but face it we all will.
Steve Gresham chairs the advisory board for Cogniscient Inc., the parent of Whealthcare Planning. He is also former head of the private client group at Fidelity Investments and author of The New Advisor for Life. See more at www.thegreshamco.com.