by Brian R. Korb, Ph.D., CFA, CFP®
Executive Summary
- 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.
Background
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.
Methodology
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
experiences.
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.
Model
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
(qualities).
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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