Let’s begin with this
What about when you’re no longer around for your spouse? Who will step in to guide your spouse through the maze of the financial marketplace?
More importantly, a financial advisor can help keep your spouse from getting into trouble by falling for a good story.
After 30+ years as a financial advisor, I’ve witnessed enough mistakes (see my personal story below) including golfers checking their phones for stock moves on the course. It never dawns on them why Warren Buffett never has followed the stock market. Investing isn’t gambling, though many confuse the two.
That golfer wouldn’t be a good fit for most independent professionals who value smart clients. Back to taking care of your spouse and preparing for contingencies that matter.
One thing worth remembering: family members, friends, golf partners, and hairdressers are not held to a legal fiduciary standard. They aren’t regulated and likely lack the requisite knowledge or experience. This distinction matters when you consider who should guide your money.
Ask yourself: would you trust them to advise on your own life savings? Would anyone you know have the knowledge to do so confidently? Handing out free advice and taking responsibility for advice are very different things. In practice, a qualified financial advisor offers accountability and documented guidance.
Who would be best placed to choose your spouse’s advisor? You or your spouse? If it’s you, you’d better do it now – you can’t after you’re gone.
Why an independent advisor matters
- Objective stewardship: Free from the biases that can accompany family dynamics or business relationships, an independent advisor prioritizes your goals and values.
- Comprehensive coordination: Independent advisors align legal documents, tax strategies, insurance needs, and investment decisions to create a coordinated and cohesive plan.
- Continuity of care: In the event of illness, incapacity, or death, an independent advisor can provide a clear, actionable roadmap for executors, heirs, and caregivers.
- Reduced burden on your spouse: A well-structured plan minimizes decision fatigue and ambiguity during difficult times – and reduce stress, as well.
Key areas of focus for your spouse
- Guardianship and succession: Clear directives ensure that dependent family members are cared for according to your wishes.
- Financial protection: Adequate life and disability coverage, along with liquidity strategies, help cover ongoing expenses and obligations.
- Estate and succession planning: An independent advisor can help provide a thoughtful approach to coordinating other professionals with regard to wills, trusts, and tax considerations preserves wealth and minimizes conflicts.
- Retirement and income continuity: A plan for preserving income streams and essential spending helps sustain a secure lifestyle.
How an independent advisor adds value
- Fiduciary standard: An independent registered investment advisor operates under a formal legal duty to act in your best interest, reducing conflicts of interest.
- Personalization: Strategies are tailored to your family’s unique situation, values, and financial realities.
- Proactive planning: They anticipate potential challenges and implement preventive measures rather than reacting after the fact. Some decisions regarding Social Security, tax planning for Roth conversions and IRMAA triggers regarding Medicare can often be irreversible. Investment decisions are made according to a formal written plan designed to meet current needs as well as long-term objectives.
- Accessibility and clarity: Complex concepts are explained in accessible terms, with documented decisions and timelines. The plan is kept current daily with a regular review schedule.
Choosing the right advisor
- Verify independence: Confirm that the advisor does not have competing proprietary products that could bias recommendations.
- Credentials and experience: Look for fiduciary credentials, relevant certifications, and check the advisor’s background.
- Transparent fees: Seek clear, ongoing fee structures with no hidden charges.
- The Big One – Avoiding unregulated scam artists. There’s one thing all the scammers seem to have in common: The lack of an independent custodian. It’s one thing to pay a fee to an advisor – it’s something else entirely to write a check transferring your life savings to the advisor’s business account for him/her to invest for you. That’s a no-no. A legitimate advisor will never take possession of your funds.
Practical steps to begin
How to begin working with a financial advisor.
- Inventory assets, liabilities, and ongoing obligations to understand the financial landscape.
- Identify primary and contingent guardianship needs and contingencies.
- Draft or update essential documents: wills, trusts, durable powers of attorney, and healthcare directives.
- Establish a communication plan for your spouse, executor, and key advisors.
- Schedule your first meeting
- Begin planning
- Schedule regular reviews to adapt the plan as circumstances change.
Closing perspective
An independent advisor serves as a steady guardian of your spouse’s financial security and well-being when you are no longer around.
Don’t wait. Getting ducks lined-up is just the beginning. Ideally, you both should have several years of the planning and review process under your belts long before your spouse is doing it all alone. When the time comes, your spouse will already know the drill – and what to avoid.
Through disciplined planning, clear documentation, and ongoing stewardship – they help ensure that your spouse is protected, informed, and capable of making informed decisions in your absence. A spouse who’s been through it all ahead of time isn’t likely to make the same mistakes others have made.
Ever watch “American Greed“? My dad once said, “If you think education is expensive, try ignorance.”
Jim
My personal (short) story:
My wife’s former husband passed away from cancer leaving her a substantial life insurance policy. He had handled everything and now she was left with a home and money to manage. She interviewed an independent advisor but felt more comfortable working with a big-name company. Unfortunately, she didn’t realize the independent advisor was the one who had access to the entire marketplace and had no production requirements to keep his desk at the firm, while the big-name firm’s advisor had different priorities.
The big-name firm’s advisor saw her coming, and placed 25% of her entire financial assets in a limited partnership and the rest in other high-commission products. In short, the advisor generated in excess of $90,000 worth of commissions in 90 days and provided no plan or guidance on management, or even on her spending habits. By the time I’d met her the damage had been done.
That was almost 30 years ago. If her former husband had been working with a independent fiduciary advisor to formulate and long-term plan and had her involved in a regular review process, the transition would have been seamless and she would most likely ended-up in a far better financial position.
