Ever play a game you think you can’t win? The role of the advisor and the actions they take when a client dies might fit into that category. If you step in and take the lead, you might be seen as predatory. If you hang back and are respectful, if can seem like you don’t care. What should you do?
We all know there is a logistical side to the question. Joint accounts need to move into the survivor’s name. The will and estate need to go through probate. IRA accounts have beneficiaries. There are tax issues. Let’s assume for the moment there’s an executor and lawyer involved who will handle many of these details. There‘s an accountant in the background too.
What should the advisor do? The most important thing is to be recognized as a compassionate human being, a friend of the family.
1. You are sending a card. That would be the first step. It’s acknowledging the loss. It’s as personal as possible. When appropriate, a Mass card is a good choice.
2. Attending the service. Times have changed. There still might be a viewing at the funeral home with the casket present. Something might still happen if there was a cremation. It’s very similar, with a small box. Because of the pandemic, sometimes it’s a memorial service or a celebration of life. Consider yourself in the role of a friend. Be prepared with written comments in case people are asked if anyone would like to speak. In my opinion, your bond of confidentiality enters into the picture. Everyone might know you are the deceased’s financial advisor. Their spouse might say as much. I think explaining you knew each other in a professional capacity would be tactful. You don’t need to volunteer yourself or be the first to speak. I think it’s important to be prepared in case no one is stepping forward. You can use your judgment if other people have stepped up, especially if time is a factor.
3. You and the survivor. At the service, you are interacting with the family. But what do you do after the service? The tactful and logical thing to do is to let the surviving spouse know you are ready to help, yet respect their privacy. You need to make the offer. A district manager at a financial services firm related the story of the advisor who didn’t step forward. They had a good relationship with both parties, yet he didn’t want to appear predatory. Over months, the relationship cooled. Finally the advisor brought it up. The spouse said: “You knew I was in a difficult position trying to get everything sorted out. Youi knew you were in a position to help me, but you chose not to.”
4. Initially rebuilding the relationship. You have stepped forward in the days and weeks that followed to help the spouse. Two key areas are changing titles from JTWOS to single name (or retitling) accounts. The other is notifying insurance companies if the policies are part of their portfolio. Your Compliance department will have a procedure. Usually this starts with the death certificate.
5. Beneficiaries and other matters. There’s an executor involved with the estate. There are procedures to follow. Generally speaking, beneficiaries listed on retirement accounts take precedence over the will. Your Compliance people will know. Your objective is to be helpful, solving problems, not creating obstacles.
6. The spouse’s new needs. The surviving spouse’s situation may now be different. They might need a steady stream of income. It’s logical that most of the assets would flow from one spouse to another. (but not always.) You should sit down with the spouse, do some financial planning and prefill as much as possible. Ideally you want a solution that lets them feel they won’t have cash flow problems. This stage is important because according to Vanguard, statistics show up to 70% of surviving spouses leave their “inherited” advisor within a year.
7. The inherited assets. There may be other heirs, especially when policies and retirement accounts list beneficiaries. Ideally the client couple introduced you to the next generation during their lifetime. It’s the “meet under pleasant circumstances” approach. If so, it may be possible for the inherited assets to remain at the firm because they are transferred into existing accounts or new accounts for the heirs.