Communicating with couples can be one of the biggest challenges facing financial advisors.
Couples account for more than half of a typical advisors client base, but 60% of couples assign just one partner to make most of the financial decisions, and 41% dont include their spouse in making decisions about a financial advisor, according to a new survey released by TIAA-CREF.
Men are much more likely to view themselves as the primary financial decision maker (62% versus 43% of women). Perhaps not surprisingly, around 70% of women leave their advisor within a year of being widowed.
This couples conundrum is a real risk for financial advisors, says Jennifer Pedigo, managing director and head of institutional business development for TIAA-CREF Asset Management. Advisors often dont have adequate insights to properly serve a spouse who survives a major life transition like death or divorce. Advisors need to get closer to couples and make a deeper connection with them.
A new practice management program created by TIAA-CREF offers some suggestions on how advisors can create better bonds with couples:
1. Know more and really listen.
Its simple but powerful, Pedigo says. Advisors should try hard to get know each partner. We found that 75% of advisors knew the retirement date and profession of the husband, but only 15% knew the same facts about the wife. Thats a very telling number.
Advisors should test themselves on how much they know about clients who are couples, suggests the TIAA-CREF practice management program, titled Get Closer: Solving the Couples Conundrum. For example, what is the name of their pet, if they have one? Where did each of them grow up? Where did they go to college? What do they like to do in their leisure time? What is each of their favorite charities?
2. Use empowering language.
Dont say, Let me handle it; or Ill talk to your spouse and get back to you; or We dont need to worry about that now. Instead, use reassuring phrases and empowering language that gives power to the client, such as, Here are your options or This is what it means to you.
3. Use client events to engage both spouses.
Financial topics popular with couples include: financing childrens college education; how to claim Social Security, protecting yourself from identity theft, and eldercare Q&A.
Couples are also likely to attend nonfinancial events like wine tastings, sports events, concerts, plays, charity auctions or fundraisers.
4. Design services that work for both partners.
Advisors who work with high-net-worth couples should put together estate-planning binders that include up-to-date financial statements, deeds, appraisals, insurance policies, pension statements, documents of charitable gifts, and other important papers.
Both spouses will feel well organized; and a surviving spouse will know that a major potential source of stress has been dealt with in advance. Couples who are collectors may want to add photographs of their prized possessions. Starting the binder clearly communicates to both spouses that you care about their comfort and are ready to serve them under all circumstances.
5. Be available and prepared for major life transitions.
An advisor should be one of the first 10 calls a widow or widower makes after their spouse dies, Pedigo says. Many advisors are not prepared to talk to a grieving spouse, but they should be.
Advisors should consider getting grief training or, preparing for another major life transition for clients, earning a Certified Divorce Financial Analyst designation.
Also, develop formal procedures for managing clients life transitions. Client materials should include information packages and checklists; office materials should include scripts for follow-up calls and training for support staff.
Its not just older couples that advisors should be concerned about. The survey found that the tendency for one partner to make financial decision for a couple is perhaps surprisingly even more pronounced among younger couples: only 18% of Generation Y couples ages 21 to 36 reported making financial decisions jointly.
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