None of us are perfect, but sometimes we can learn from each other and avoid making the same mistakes. Here are the most common mistakes widows tend to make and why you should avoid them.
1. Rushing to make lifestyle changes. Sometimes friends and family, and even investment advisors with the best intentions may inadvertently make a widow feel pressured into making decisions quickly. They may think that it will be a relief to her to have things "settled." In reality, most things can wait months before they need to be addressed. Make sure that you take the time and collect the information to feel confident about your choices. For example, selling your house or a family business at a bargain price, just to make life simpler at the time, may not be in the family's best interest down the road.
2. Trying to compensate for the loss of the other parent. For widows with younger children, the urge to be the perfect parent, fulfilling every request and desire, being chauffeur, homemaker and bread-winner can be demanding and exhausting. A widow's spending behaviour may also veer off in one of two extreme directions. She may become extra-cautious and tight with the family's expenses for fear that the money will run out. Or she may become overly generous, treating children to more vacations and other material gifts that the family can afford, in order to compensate for the loss of a parent.
3. Treating each meeting with a professional as an isolated event. When searching for an investment advisor, look for someone who makes you feel comfortable expressing your feelings and fears, and with whom you would like to develop a long-term relationship. You also want to make sure that they are willing to work with you as a team, communicating on your behalf with your other trusted advisors, such as your accountant and lawyer. Bringing together a team of experts, all acting with your best interests in mind, will be an invaluable support to you over the long term.
4. Assuming you cannot manage or at least supervise the management of your own investments. Over time as you gain greater financial education, you can grow into doing some of this management yourself. Select an investment professional who will meet with you on a regular basis and take the time to explain financial concepts, allowing you to grow into a take-charge investor.
5. Leaving the portfolio the way your husband had it. Although you might not like to be reminded, the investment portfolio that suited you and your husband may not be the best design for you alone. If you've never been an investor, for the sake of the long-term health of your financial state, find a professional to help you objectively review the investments that you have inherited and their suitability. Even if your husband had a great record as an investor, chances are he would rebalance the portfolio annually and make new choices on what to buy, sell or hold.
Four Important Qualities to Seek In a Financial Advisor
1. An Advisor Who You Feel Comfortable With and Who You Can Trust
More than anyone, widows need to find an investment and financial advisor who puts their interests first. But more than that, they need to find someone who supports and understands them, and who they feel comfortable with developing a personal and trusting relationship. You have just had a shock to the system, a major blow to your lifestyle, and need to reevaluate your plans and goals for the future. Take your time finding the right professional to work with, ask your friends who they are working with. You don't have to make your decision right away, but chances are that you will know relatively quickly if you feel comfortable with an investment advisor.
2. An Advisor Who Takes the Time to Answer Your Questions
If money and investments are foreign territory to you, it's essential to work with an investment advisor who has strong communication skills. Choose a professional who listens more than she talks, who asks you a wide range of questions in order to understand your feelings as well as facts, and who shows patience when you are not ready to make a decision. Find an advisor who can explain terms and strategies in "plain English" and who is patient and respectful when answering your questions.
3. Ongoing Discussion of Your Financial Goals
Your goals for life as a widow may not be the same as they had been with your spouse. Develop both short- and long-term goals as you talk to friends and family, and prioritize what is most important to you and your family. Your goals will change as your life settles into new patterns. You may plan on staying in the same city and house, or downsizie and move closer to family. You may decide to travel more, spend more time visiting distant friends, or consider altering your retirement plans. It's fine to change your mind – the financial plan that you and your investment advisor design is always a work in progress, and subject to editing. But it's important to have clear lines of communication, so that your investment advisor is aware of any changes in your planning, and can determine if your investment portfolio should be adjusted to accommodate the new goals.
4. A Focus On Financial Education
Widows need to prepare for the rest of their lives, and a strong financial foundation will give you the confidence in knowing that you're making smart decisions along the way. You owe it to yourself to slowly and gradually build up your comfort and experience with making financial choices. If your husband had been the caretaker of your money, you will especially want to learn enough to be able to ask the right questions, and understand what your investment advisor is telling you. Education over a period of years through newsletters, personal discussions, question and answer sessions, books and articles, and more formal education seminars can be very helpful.
If you or someone you know is recently widowed, and has questions about their financial situation & how to prioritize the decisions that lie ahead, please contact me as a resource to help you.
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