Should You Still Be Using Your Ex's Financial Advisor?

Three reasons you might want to change that

Back in the “old days,” women tended to be financially dependent on their husbands and thus were often paralyzed when they were left managing their own finances upon his passing. Statistically speaking, we know women expect to outlive their husbands. Harvard Health reported in 2016 that 57% of those age 65 and up are female, while 67% of those at least 85 are women. The average woman lives five years longer than the average man in the U.S. None of these figures is a surprise to us, and when you throw in the rising divorce rate in the U.S., you have an even greater chance that you’ll be managing and investing your own money at some point.

Thankfully, women these days are much savvier and proactive, so they’re taking the reins of their financial futures before something really serious happens. In the case of a divorce, it may seem obvious why you don’t want the same financial advisor as your husband, but things get murkier when you’re talking about the assets you and your husband own together as you both age.

Continuity might not be best

So knowing that you’re probably going to be in charge of investing your family’s life savings one day, you might think your husband’s financial advisor is a perfectly good fit for you. After all, he already knows your finances, so for continuity’s sake, why rock the boat? But this may not be your best option.

It’s no secret that men and women are inherently different. Women tend to worry more, especially when it comes to figuring out how their money is going to last them the rest of their lives, while men want to brag and prove how much they know about investing, so the relationship and the discussions about money that your husband’s been having with his/ your advisor are not necessarily going to align you’re your personal priorities. In fact, the odds that you’ll be able to work well with the financial advisor your husband worked with are low.

Three questions to ask

Does he relate to you as yourself… or as the wife of his friend/ client? It’s important to realize that he won’t relate to you the same way he related to your husband. They may have been golf buddies for years, but he may look down on you as the wife who doesn’t know anything about investing. If he’s been a friend of both of you for a long time, then there’s a chance he might, but odds are that he won’t. You’re not a second-class citizen in this business relationship. You’re the boss.

Are you really focused only on investments, or do you need a holistic financial planner? If you don’t know as much about investing as your husband and because you’re in your 60s, you might need more of an estate planner than someone purely focused on investments. An advisor who helps you plan puts the spotlight on helping you work through what-if scenarios that can help you see clearly the best and worst cases financially. It all depends on what type of advisor your husband was working with. Some advisors are holistic planners, while most are salespeople who advise on which investments to buy without discussing your overall circumstances. A really good financial advisor works through your concerns, including taking into consideration any real estate, tax issues or desires you have to help your kids or grandkids pay for college.

Is the advisor really a fee-based fiduciary, or is he just a salesperson? You want to own the relationship and be fully in control of it, and the only way to do this is to get someone who doesn’t just sell investments. You want someone who is a true fiduciary and doesn’t work for a big-name investment bank. They should also be fee-only or fee-based, with at least 90% of their income from fees. This way you know that they’re truly looking out for you and not just pushing an investment because they will earn commission from it.

Whoever you end up hiring to be your advisor, get it all in writing, especially all the costs both for the advice and for the investments. Get a good feel for the advisor’s overall practices and approach to the financial planning process. The fact is, a true fiduciary financial advisor will put it in writing that he’s going to put your financial interests first. This is essential, and as part of your request, ask for a simple outline of where he gets his compensation. A good advisor knows you will want this.

So when do you start looking for your own advisor?

Don’t wait until something traumatic happens to find your own advisor. If you see your husband’s cognitive faculties starting to fade or you know your husband has a history of heart attacks or strokes, it’s an excellent time to start. Sit down with him and talk about why you don’t think it would be a good idea to keep working with his advisor and set forth an action plan to hand over the reins to your advisor when it’s time.

In the case of a divorce, the time to start searching is the moment you start to feel that your marriage is on the rocks. For example, I recently connected with a woman in her late 50s who felt her marriage was in trouble. She had funded her husband’s struggling business with her own stock options and the wealth she earned as a successful executive. She had depleted her own wealth to make him into the success he became, but she didn’t wait around until something happened. She avoided becoming a victim and instead found a financial advisor who specializes in divorce cases to quietly start looking into her options.