by Brian R. Korb, Ph.D., CFA, CFP®
- There are one million baby boomer widows in the United States, a number that will rise significantly in the future because there are almost 25 million married boomer women, and 70 percent of them are expected to survive their husbands.
- Trust is crucial for a relationship between a financial planner and widowed client to be long-lasting and successful.
- This paper presents a model that financial planners could use in helping them build a trusting relationship with their baby boomer widow clients.
- The author conducted a systematic grounded theory qualitative study that involved interviewing 8 financial planners and 12 of their baby boomer widow clients.
- The study resulted in a model of the process of building a trusting relationship. This model has five components: causal conditions, intervening conditions, contextual conditions, strategies, and consequences.
- Each component is analyzed and discussed both from the financial planner's and the widow's perspective.
- The findings of the model suggest specific actions to take and qualities to exhibit for a financial planner to be successful in building a trusting relationship with a baby boomer widow client. These actions include more frequent interactions, employing empathetic listening skills, being a decision partner, being willing to establish some personal rapport, addressing cash flow concerns, being especially responsive, and others.
- This model not only has implications for a financial planner's relationship with baby boomer widow clients, but also with married baby boomer women clients prior to widowhood.
Brian R. Korb, Ph.D., CFA, CFP®, is an associate professor of personal financial planning at Texas Tech University in Lubbock, Texas, and was a financial planning practitioner for eight years.
Women born from 1946 to 1964, "baby boomers," represent a major demographic slice of the U.S. population. However, little is being done to prepare married baby boomer women for the financial realities of widowhood, or to discover their unique needs once widowed. American baby boomers total about 78 million people, or roughly one out of every four Americans. Baby boomer women comprise 37 percent of the female population age 15 and older, with married baby boomer women numbering almost 25 million. Because 70 percent of baby boomer wives are expected to outlive their husbands, the current population of more than one million baby boomer widows is expected to increase dramatically in the next few decades, and could eventually rise to almost 20 million women.
Financial planners play a key role in insuring the financial wellness of current and future baby boomer widows. Low financial literacy combined with the fragile emotional state of widows can make them vulnerable to acting on inaccurate, or worse, unethical advice provided by family, friends, or financial advisers. Building a trusting relationship with a financial planner is crucial to ensure the future financial and emotional wellness of these women. This paper focuses on the results of a study of financial planners and their baby boomer widow clients to develop a model financial planners can use to build trusting relationships with baby boomer women, especially widows.
A baby boomer widow's relationship with a financial planner can
affect the widow's financial well-being, and as a result, her
emotional well-being. However, trust is essential for both of these
to improve. Women who had experience with a financial consultant,
particularly one who wrote a financial plan for them, had an
increased level of understanding of key financial facts (National
Center on Women & Aging [NCOWA], 1998). Emotional benefits such
as increased comfort and confidence can grow from an adviser
relationship and the widow's increased financial literacy and
enhanced financial status. Women become more involved in financial
planning when they gain confidence (Glass & Kilpatrick,
December 1998). Their confidence can be boosted through increased
financial planning support, as well as increased knowledge.
Baby boomer widows need trust to build a relationship with a financial planner that has the potential to positively affect their financial and emotional wellness. However, boomers are much less likely to trust financial advisers than those in their parents' generation (Dychtwald, 1999). This presents a challenge to financial planners seeking to serve boomer clients. A recent AARP study showed that older investors' (age 50 and over) primary concern is which adviser to trust to help them deal with the complexity and choices involved in today's investing environment (Brown, 2004).
Baby boomer women said that if they were going to work with a professional adviser, that person should be trustworthy (Lown, 2004). A trusted adviser can benefit a widow by providing valuable, objective, unemotional advice, as long as the person is not a family member (Goodman, 2004). Finding a trustworthy, intelligent, and honorable adviser is essential for a widow (Dunnan, 2003). The purpose of this paper was to research methods by which financial planners can develop a trusting relationship with baby boomer women, particularly widows. The methodology used in this research will be discussed next.
I conducted a qualitative study using the systematic grounded
theory design to evaluate the process of a baby boomer widow
working with a financial planner. This enabled me to learn the
views of financial planners and their baby boomer widow clients,
rather than just measure variables. Qualitative studies have been
shown to secure fuller, more detailed, and richer descriptions than
could be done using a quantitative approach. The reader should note
that the validity of qualitative study results is not able to be
shown statistically, but is determined by readers' life
Eight financial planners and 12 of their baby boomer widow clients were interviewed for this study. The financial planners were found using convenience sampling from e-mail advertisements to professional financial planning association members from FPA and the National Association of Personal Financial Advisors (NAPFA). They then spoke to a select number of their baby boomer widow clients and provided them the opportunity to contact me directly to participate in the study. Because the financial planners only referred their best clients to me for the study, this report may provide insight into best practices for financial planners dealing with baby boomer widow clients.
At the time of the study, the financial planners had been in business for 10 to 30 years, with the average being 19 years. Two of the planners were females, and all except one had their CFP® certification. The 12 widows were ages 45–60 at the time of the study, and were widowed between ages 35–56. They were located in nine states and had worked with their financial planner for 2–21 years. Seventy-five percent of them began their relationship with the financial planner within one year of being widowed. In keeping with the qualitative approach to the study, new participants were interviewed until the interviews resulted in very little additional information being added. Research has shown this typically happens once 10–18 participants have been interviewed, affirming the use of 20 participants in this study.
The results of this study take the form of a model or theory
about what I learned regarding the process of a baby boomer widow
working with a financial planner. The model in a qualitative,
systematic, grounded theory design revolves around a central
phenomenon. The central phenomenon is typically a concept or
process that serves as the main idea of the research and to which
most categories of information are linked. The central phenomenon
of this study is financial planners developing a trusting
relationship with baby boomer widows.
The five major categories that influence the central phenomenon include causal conditions, intervening conditions, contextual conditions, strategies, and consequences. Causal conditions cause the central phenomenon to occur, while intervening and contextual conditions influence the strategies. Intervening conditions are broad (macro) in nature and possible effect, whereas contextual conditions are more specific (micro) and limited in possible effect. Lastly, the strategies, also called actions and interactions, if implemented, will result in consequences. Figure 1 illustrates the model. Each of the model's components will be discussed in turn, along with a practical application for the financial planner to consider.
Causal Conditions. Causal conditions are those categories that influence or cause the central phenomenon to occur and influence the strategies. They answer the question "What caused the baby boomer widow to initially trust a financial planner?"
The boomer widows provided many answers to this question. Causal conditions addressed below include the death of a husband, a husband's relationship with the financial planner, cash flow concerns, prior financial experience, emotional state, and money to invest.
Death of husband—"I need a decision partner." One of the main causes for a baby boomer widow to initially trust a financial planner was the death of her husband. I mention this first because, without this cause, it is doubtful that the majority of the women would have sought a financial planner at all. Only two of the widows had a pre-existing relationship with a financial planner. All but one of the remaining women sought the help of a financial planner within a year of their husband's death. The husband was a decision partner in financial affairs for most widows, and was the sole financial decision maker for five of the widows. In addition, the husband was the sole income earner for half of the households. Therefore, almost all of the widows had lost a co-decision maker or the sole decision maker and income earner in their household. Many of them found it necessary to trust a financial planner immediately to support them in making financial decisions and assessing their financial situations.
Cash flow concerns—"Am I going to be able to make it?" Many widows mentioned that they were concerned about their cash flow once their husbands died. They had just lost an income and were unsure whether they could survive without using up all their assets. "I didn't know how far [they were] going to stretch," said one widow of her assets. Another widow said, "I was not going to have an income and I did have some money, so I just needed some guidance on how to plan for that and not use up what I had." This appeared to be a major motivator for widows to establish a financial planning relationship. They had to trust the planner to give them wise cash flow advice and assure them that they would "be okay."
Emotional state—"I'm in a fog and feel like I had a stroke." The emotional state of the widow after the death of her husband was another causal condition. One widow described the overwhelming emotions of her husband's death as putting her in a "fog" that she did not come out of for a year. Another widow compared the experience to having a stroke, "When you lose a spouse, a lot of us … lose everything, you lose your ability to think, you lose your ability to write." This emotional state can often affect one's motivation as well, according to one widow, "But believe me, when the person you love the most in the world dies, I mean, you just don't want to do anything." Many widows initially trusted a financial planner and sought his or her assistance because they knew that something needed to be done financially, but acknowledged that they had neither the emotional nor mental energy to deal with it. This was even true for those with prior financial experience and high financial literacy. As one widow said, "Even though you're capable of assessing your tax situation, or knowing about your portfolio, you don't want to do it. You don't have the mental energy to do it."
Financial planner practical application: When marketing to prospective baby boomer widow clients, be an empathetic listener and emphasize how you can serve as a decision partner, who will help them solve immediate cash flow concerns.
Intervening Conditions. Intervening conditions
are the macro factors that influence the strategies or actions and
interactions. They are broad in scope and potential effect.
Intervening conditions often affect causal and contextual
conditions, so the model illustrated in Figure 1 is an effort to
simplify real life. Intervening conditions discussed below include
location and prior financial experience. These were all related to
the level of trust a widow had in her financial planner and the
strategies planners used to build trust.
Location—"Be close by and accessible." Relative geographical location of the widow and the financial planner affects their actions, interactions, and trust level. Many widows live very close to their financial planners' offices. Those who live nearby often find themselves interacting in a less scheduled way. For example, one of the widows will stop by the office to specify a cash need. Another widow will stop by to drop off papers to be shredded. The widows who live close to their financial planner appear to meet face-to-face more often, as well. Widows who experienced this increased level of interactions described greater trust than other widows.
Prior financial experience—"This is all new to me." The widow's prior financial experience broadly determines the actions and interactions that affect trust between the widow and her financial planner. Some of the widows had little financial experience when their husband died. They did not know how much their monthly bills were, nor did they ever write checks or maintain a budget. This influenced the initial interactions the widow had with the financial planner and necessitated a certain level of initial trust. The financial planner would help her set up a budget, thereby summarizing her income and expenses. He would also teach her how to write checks and balance her checkbook.
Financial planner practical application: Many financial planners only meet with clients by appointment; however, if you have baby boomer women or widow clients, you might want to extend an invitation for them to drop by your office anytime. Not only will this help build your trusting relationship, but it will also satisfy a social interaction need that is so prevalent in many widows.
Contextual Conditions. Contextual conditions
also influence strategies. However, they are narrower in scope and
potential effect than intervening conditions. The primary
contextual conditions are the frequency, topics, and types of
interaction. Each of these will be discussed in turn.
Frequency of interactions—"Meet with me often, especially at the beginning." The frequency of interactions often influences the strategies taken by the financial planner and widow. Those with more frequent interactions tend to deal with a wider array of financial topics. This is especially true at the beginning of the relationship and may be partially the result of the prior financial experience of the widow, an intervening condition. It appears from the data that a widow with more financial experience had fewer initial interactions with her financial planner than one with little or no prior experience. The frequency of interactions for these women also dropped considerably as time went on and they became more knowledgeable with financial matters and grew in their trust of the financial planner. The emotional state of a widow also likely influenced this trend. As the time grew from the husband's death, many widows became more and more comfortable with handling financial matters.
Topics or goals of interactions—"Find out what's important to me." The topics or goals of the interactions also influence the strategies to be discussed below. Most financial planners sought to understand the dreams and goals of the widow. This seemed to have a positive effect on the widow's trust level. These dreams and goals influenced the agenda of the interactions, as well as the strategies recommended by the financial planner. Frequently stated topics of concern included adequate cash flow, college education, financial independence, and estate planning. However, financial concerns weren't the only topic of the meetings. "We talk about her portfolio for 10 minutes, and personal and family issues for 50 minutes," stated one financial planner.
Types of interaction—"Meet me face-to-face, and be flexible on location." Interactions between the widow and her financial planner can take many forms. Perhaps the most commonly used type of interaction is a face-to-face meeting. Based on the data, they have been held at the widow's home, the financial planner's office, or in a neutral location such as a restaurant. The type of interaction is a form of contextual condition because it does influence the action and/or interaction itself. For example, a widow with little previous financial experience would often call her financial planner to obtain an explanation of a strategy used. However, it was not until she would meet with him face-to-face that she grasped the strategy.
Financial planner practical application: Meet with your baby boomer widow client often and be willing to spend more social talk time with her, especially if she is a recent widow. Vary your meeting location by offering to take her out for lunch at her favorite restaurant. She will appreciate it greatly. As one widow told me, "I guess one of the things is you don't get out too much when you're a widow."
Strategies (Actions/Interactions). Strategies
or actions/interactions stem from the central phenomenon and are
influenced by causal, contextual, and intervening conditions. They
are means by which financial planners can build trust with baby
boomer widows. This is where "the rubber meets the road." These
strategies are what the widow expects the financial planner to do
(actions), as well as what she expects the planner to be
Actions—"Be my decision partner." The actions desired from the financial planner that were most often mentioned by widows were dealing with children issues, being a decision partner, answering questions, meeting financial expectations, providing grief support, and planning cash flow and income sources. If the widow has young children, the financial planner should address the topic of college funding. The planner may want to offer to speak to the widow's children regarding her financial situation if the widow thinks that would be helpful.
The planner should act as the widow's decision partner, not her decision dictator. A closer, more trusting relationship can be developed if the planner assists the widow in making decisions, rather than dictating the decisions to her. One financial planner advises new widows not to make significant changes for 12 months, advice that was echoed by a number of widows. As another planner advised, "Sit back, don't push, let her decide in her own time." Giving the widow a "decision-free zone" was mentioned by yet another planner. The widow is given the freedom of making no decisions for a time, and knowing that it is okay. A planner may want to create alternative solutions, convey the pros and cons of each to the widow, and then talk the widow through the decision process when the time is appropriate. However, the decision should ultimately be the widow's. Remember, she will not want to be rushed.
Planners need to answer the widows' questions honestly and in a timely manner if they want the widow to trust them. This is linked to being responsive, a quality that will be discussed below. The planner should respond to any questions patiently and be willing to explain topics more than once. Many widows mentioned their sensitivity to harsh or condescending responses, so planners should watch how they communicate.
The planner should never forget that while the widow may not have a high degree of financial literacy, she nonetheless expects the financial planner to meet the widow's financial goals. Discerning the widow's goals and dreams and helping her plan to achieve them should be a priority for the financial planner. The planner should then communicate to the widow the progress toward these goals regularly.
Providing grief support is an important action the planner can take for many widows. This seemed to be especially true for those widows who lost their husbands suddenly. The planner should be aware of the grieving process the widow is going through, particularly if the widow came to the planner soon after her husband died as did most of the participants of this study. The planner should also train his or her staff in being supportive to grieving widows. Being aware of local grief support groups can enable the planner to recommend such a group to a widow as appropriate.
The last action to be discussed here, but certainly not the least, is for the planner to provide cash flow planning to the widow. This was named as one of the top causal conditions for which widows seek out a relationship with a financial planner. The planner should obtain enough financial information from the widow that he or she can put together a budget for her based upon her available income sources and cash flow needs. However, if able, the planner should help the widow create a budget that has some flexibility. One planner advised allowing money in the budget for "retail therapy," dollars spent in the first three years of widowhood on travel, shopping, presents, etc. Her widow client hit this point home with her comment, "If you have a financial adviser saying, 'No, you can't afford that; no, you can't spend this money,' it's bound to be stressful." Planning cash flow can help allay many of the widow's fears and increase her trust in the planner at the same time.
Financial planner practical application: When it comes to decision making, give your baby boomer woman or widow client alternatives, discussing the advantages and disadvantages of each, then let her make the decision. After the decision is made, be sure to provide her continual updates on progress toward her goals.
Qualities of interactions—"Be a responsive, caring
person." In addition to trustworthiness, the principal
qualities widows looked for in planners were comfortableness,
responsiveness, and caring. All of these qualities can assist in
building trust between the widow and the planner. Even though they
are not specific actions, the planner can take steps to exhibit
these qualities with his or her widow client.
Being comfortable with her planner is very important to many widows. As one widow stated, "I need somebody that I'll feel comfortable crying with." The planner can help the widow to feel comfortable by the way he or she communicates with and treats her. Being interested in her as a person and taking the time to learn about her life is one way to build a widow's comfort level. Another way to do this is for the staff and the planner to treat her as a special person. For example, one planner would begin all her meetings with her widow clients by first having a nice tea service complete with beautiful china and delicious chocolates. Another planner would take the widow out for lunch at a nice restaurant. Being personal with the widow and sharing about his or her own life can establish reciprocity and increase the comfort level in the relationship. As one financial planner said, "It was very important that she knew who I was as a person."
Widows also looked for planners who were responsive to their needs and questions. This involves the planner promptly returning all phone calls and e-mails from widow clients. It also means the planner is proactively seeking to understand the widow's needs and then taking actions or developing plans to meet those needs as appropriate. As one planner lamented, "I should have been more assertive in going and making sure she was okay."
Being responsive also means communicating well. Using language that is free of financial lingo is a good starting point. Keeping it simple but not condescending is also important. "Don't talk down to the widow," said one financial planner. Her client mentioned that "she doesn't make me feel stupid." One widow who did not have a good experience with her initial financial planner described it this way: "I have a brain, but it felt like, 'Come sit on my lap you little girl, and I will take care of you.'" Lastly, a financial planner and his client both advised to be kind and soft-spoken, not harsh, when communicating.
By implementing these strategies, a financial planner communicates a level of caring about the widow. The widow wants to know that the planner is interested in her and cares about her as a person. As one widow said about her financial planner, "I know that she cares and she is not in it just for the money." Sharing the widow's concerns, being empathetic, and spending extra time with her are some ways a planner can show caring to a widow client.
Financial planner practical application: Spend more time asking her questions about her family and sharing with her about yours than you do talking about financial matters in your meetings. Put her on the top of your list when it comes to returning phone calls or e-mails.
Consequences. Consequences are the result or
outcome of the strategies. The goal of a financial planner should
be to deploy strategies such as those above with the intention of
generating positive consequences that will ultimately build a
relationship of trust. Any given strategy may have many
consequences associated with it. Based on the results of this
study, most of the consequences of the above strategies will result
in a higher level of trust between the widow and the financial
planner. I will highlight the direct results, benefits, and
emotional effect of strategies below.
Direct results—"Show me the money!" Direct results of the strategies were numerous and varied. There were direct financial results. Budgets were created, giving the widow a guideline for her spending and giving. Financial plans were formulated providing the widow with a road map for her future to include her retirement years. Portfolio diversification through the creation of an investment plan was accomplished. Estate plan documents were created or updated to reflect the widow's new life situation. These are just a few of the direct results of the actions and interactions between the widow and her financial planner.
Benefits—"Help me make the hard decisions." There were more than 50 references to benefits that resulted from the actions and interactions of the widow and financial planner. Many of these had an emotional component to them and will be discussed below in emotional effect. One benefit was the ability to "preserve the money that came my way," according to one participant. Having the financial freedom to help people in need was a benefit to one widow, as well as being able to have the "way of life" she desired. Knowing that her children would be "taken care of" if something should happen to her was of value to one person. "Keeping me from making bad decisions, or just being able to stay on track when emotionally I thought maybe I should be doing something else," was mentioned by another woman. One widow explained, "It is nice to be involved in the financial process, but it's even better to have somebody do the details." Having "somebody nudging you" was a benefit to one widow. "To have someone helping you make all these hard, hard decisions and an objective adviser" was how a widow summarized the benefits to her. These were just a few of the benefits named by the widows that directly and indirectly resulted from the strategies and actions or interactions between the widows and their financial planners. Interestingly enough, not one widow mentioned an increase in her financial literacy or knowledge as a benefit. There were also many emotional effects of the strategies.
Emotional effect—"Enhance my peace of mind." Many widows spoke more about the emotional effect of their interactions with financial advisers than the direct results or benefits stated above. They described the emotional effect of their relationship using phrases such as "peace of mind," "sense of security," "feeling important," and "ease in my heart and mind." Lack of worry was often stated by the widows as a result as well. One woman mentioned, "I feel more in control of my finances." This also seemed to be a common consequence, perhaps because many widows felt out of control immediately after their husband's death. They also felt more comfortable with their financial situations and confident about their plans. As one widow exuded, "I trust him completely and I don't worry."
Financial planner practical application: Once a year, ask her to talk about what she most appreciates about your services, as well as what you could improve. Her response will provide you direction on what to emphasize in your interactions in the upcoming year. You might be surprised.
Summary and Conclusion
This model provides a theory on how a financial planner can
build a trusting relationship with a baby boomer widow.
However, as with any model, it is a simplified version of real
life; and therefore, does not capture all the interactions between
components. The study is also not meant to be comprehensive, in
that it is the result of interviewing only 20 people. The differing
causal, contextual, and intervening conditions experienced by each
widow affect strategies and make it difficult to generalize them
across all widow/financial planner relationships.
In spite of the limitations, the model is specific enough that it could be used by financial planners as a means of establishing a trusting relationship with their baby boomer widow clients. In addition to using these findings with baby boomer widows, a financial planner may implement the ideas in this model with existing married baby boomer women clients, thereby building a trusting relationship prior to the event we hope never happens: widowhood. May we financial planners hear, as one widow so eloquently stated, "My financial planner helped me through the process and so relieved me of the worry of my financial future."
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