Welcome to Financial Advisor IQ

NEW: Small steps help clients engage at their own pace

December 29, 2017

This time we hear from Richard T. Cook, Jr., a financial advisor at Creative Financial Group in Newark, Del. He recalls how encouraging a client to make incremental decisions gave her time to grieve while also engaging at her own pace.

My partner always told me that when clients lose a spouse or a very close loved one they shouldn’t make any major financial decisions for a minimum of six months to one year. It’s a very emotional time and it’s nearly impossible for the client to be rational with their money. At the same time, there are often important tasks that need taking care of, and it is important clients don’t disengage from the planning process entirely as they work through their grief. Instead, advisors need to find a way to encourage clients to find a pace that works for them.

I experienced this firsthand with a young woman who came to me three years ago, shortly after her father passed away suddenly. Most other beneficiaries I’d worked with had been widowed spouses; I don’t often run into 24-year-olds who have inherited large sums of money, which made this situation unique.

This woman lived in a city a few hours away and drove into town for our first meeting. I started the way I always do, by asking, “What are you trying to accomplish?” She was aloof and unable to give me any goals. “I want to act like the money doesn’t even exist,” she told me. I could tell she was completely lost.

Operationally we had to move the money into a cash account. After doing that I decided to take a step back and do an inventory of everything her father owned. This turned out to be a rather complex task. He had done no planning; there were many individual stocks and several real estate properties in his name.

Right away, I knew there was going to be a lot of administrative paperwork. That type of paperwork isn’t technically my job but I saw that my client didn’t know where to start and had no other help. She needed to take some action but she wasn’t yet ready to make any big plans. Instead, we decided to focus on closing the estate and putting the money to the side, for later. We were going to work in baby steps.

We met once a month for six months and spent two to three hours in each meeting chipping away at all the paperwork that had to be taken care of before we could move on. It had nothing to do with investing money or long-term goals; it was really just the initial steps to get her organized and comfortable.

Richard T. Cook

It took us about six to seven months to fully close the estate and transfer everything to her name. Over that period of time I noticed she was slowly becoming interested, asking me more questions at each meeting.

Three months after the estate was closed — one year after her father died — she called and said she finally wanted to talk about the money. We had reached a point where she was emotionally stable and ready to make some decisions about the assets she’d inherited.

Developing a process to lighten her load in small increments let her grieve at her own pace and freed her mind from being overwhelmed by the big picture. At the same time, taking these small steps rather than disengaging entirely let her become comfortable with me as her advisor, and slowly start thinking about her goals.

Now, she’s one of my best clients. We meet twice a year and talk more about advanced investing goals. Our relationship is strong because I didn’t rush the process in the beginning, but instead allowed her to find a pace that worked for her.