Updated: Feb 3
Together – no one minds when “together” means eating ice cream, watching a great movie, opening presents. Together falls by the wayside when the activity isn’t fun, like when it comes to taking out the garbage or managing family finances. If it was your spouse who managed the money, the pain of loss can be magnified by money worries and the unease that comes with knowing there is a looming job to be done that you just haven’t gotten around to yet. Is investment management on that list? In our series on how to manage finances after the death of a spouse, we’re exploring tips from FINRA, a reliable financial source. Today, Tip 8: Your Investments.
Hire a Professional – Human or Robot
If you already have a financial professional and you are comfortable with him or her, there is no need to change. That person or firm can be a great source of help and comfort during this difficult and confusing time.
However, if your spouse did everything on his or her own, and now you want help, you’ll want to do your homework in finding an investment professional. How can you find a financial advisor or planner who you can trust? Unfortunately, there are no fool-proof ways to guarantee honesty…or compatibility. Even so, you can do your homework to make sure you avoid advisors who have already behaved in unethical or criminal ways, and you can get references to see what current clients – and prior clients – think about that financial professional. The U.S. Securities and Exchange Commission’ investor site explains the value of BrokerCheck where you can look up the record of a broker or advisor at the BrokerCheck website. Although this site is extremely helpful, it won’t tell you if a financial professional is shady or too risky for you. That is a decision you have to make for yourself.
What about a “Roboadvisor”? – those are financial entities that you access online and, in the words of the SEC, “allow individual investors to create and manage their investment accounts through a web portal or mobile application, sometimes with little or no interaction with a human being with the potential benefit of lower costs than traditional investment advisory programs.” This kind of investment advice may work for you; Investor.gov has a great article about the value and safety of these types of investment assistance.
When it comes to financial assistance (and romance, and home renovation, and best anti-aging creams), it would be great if you could count on your “gut” to tell you who to hire and who to avoid or when to buy and when to run. However, gut feelings work best when you are in an environment where you are an expert. For example, I cook a lot, so when my gut feeling says that the water is too cool to make my bread rise properly, I’m right. I’m less of an expert on car maintenance, so that funny sound in my Toyota could mean my coat sleeve is hanging out the door or that the transmission is breaking.
When you don’t know much about financial matters, it’s harder to judge the competence and honesty of a potential advisor. I do think that if you don’t like the person or if you have a general sense of distrust, you’d do well to choose someone else, but the reverse isn’t necessarily true: plenty of us have made the mistake of liking people who later betrayed us.
Do It Yourself
To invest, you can decide if you want to go DIY. If you want to manage your own money and trade stocks or exchange traded funds (ETFs) on your own, you can open an account at an online, self-directed brokerage like Etrade, Scottrade, Tradestation, Ally, etc.; or a mutual fund account at a place like Vanguard; and manage your own investments (no recommendations here from me on any of these; it’s just a list of ones I am aware of!). Those sites offer free investor education; Investor.gov and FINRA have informative free tutorials as well. My “11-Step, DIY, Comprehensive Financial Plan Workbook” is a great resource for DIY’ers.
FINRA’s page on investing can help you learn more about doing it yourself or finding an advisor to help. We’ll continue to cover FINRA’s tips for widows in the next few articles. Tip 9 discusses actions you might want to with regard to your home. Thank you for joining me.
Kathryn Hauer, a Certified Financial Planner ™, adjunct professor, and financial literacy educator has written numerous articles and several books including the “11-Step, DIY, Comprehensive Financial Plan Workbook” and “Financial Advice for Blue Collar America.” She works to help clients and readers understand and act on complex financial information to keep them and their money safe. She functions as a strong advocate and guiding light for her clients as they move through a murky and unfamiliar financial world.