Cannon Financial Institute

Performance or Provision?


Boomer males are getting older. Of their future, only two things are certain, taxes and death. One other thing is highly probable, and that is seven out of ten married women will become widows. Or, to put it differently, seven out of ten married Boomers will pass away before their wives.

Hence, in many of your accounts, the wife of the male boomer will end up with the money and the control. Industry statistics show that within twelve months of the death of the male account holder, seven out of ten widows will transfer the assets of the deceased husband to another manager.

To prevent this, you need to start integrating the spouses of your account holders in your client relationships. As you begin to integrate the spouse into the client relationship, be aware that every married couple brings a third entity to every meeting, that entity being the collective stakeholders of the account. When both spouses are present, remember you are communicating through them to the other stakeholders in the account. This may provide you with an “on-ramp” to begin relationships with grandparents, children, grandchildren, or others.

 How does this third party or entity as it was, manifest itself when couples work together? A key dynamic that emerges with the addition of the matriarch is a new perspective on the account. Broadly speaking, the patriarch and matriarch will share a similar perspective on the investment account’s “Performance.” However, the matriarch will also bring the additional perspective of “Provision” to the dynamics of managing wealth.

What do I mean by provision? Every member of the family who comes under the financial umbrella of the matriarch will have aspirations for a life they desire. To achieve this, every stakeholder will benefit from some type of financial support.  This includes investment management plus wealth management strategies and tactics that may be best expressed as goals. Upon attainment of these goals, an individual’s aspirational life will be realized.

So “Provision” is all about how the family’s wealth can support the achievement of these aspirations for every member of the family. The powerful dynamic of “Provision” is much easier to surface when both spouses are present and involved in the account relationship.  The challenge for most advisors is while they agree with this rationale and see the benefit of integrating both spouses into the relationship, they don’t change their behaviors to make it happen.  The reason is that most advisors do not take the time to deconstruct the value of doing this.

In cases of events which are inevitable but of an indeterminant time in the future, we tend to think of the consequences only in the abstract. When contemplating the death of our account holders, we heavily discount that it will happen and that there will be consequences because there is no known timetable. So, we tend to ignore the event or consequences, making it very hard to justify changing familiar patterns and behaviors to accommodate something that does not feel urgent. 

To change behavior, it helps to change the feelings about the consequences of the events, in this case, the transference of wealth management decisions from the patriarch to the matriarch.  A great exercise is to take each account in your book, where the account holder is male and over 65, and calculate the impact of losing those accounts over the next five years. 

Now the abstract becomes concrete. We can look at our spreadsheet and see what will most likely happen in the next five years.  Despite this, our minds will begin to discount the reality in front of us because it is distressing, and the automatic response of our minds is to comfort us and make us feel safe. “Don’t worry. This won’t happen.” In fact, your mind will usually go another step, and you will think, “not only won’t it happen but if it does, we can just deal with it then.” So, we give ourselves permission not to make changes.

Our mind has a series of built-in psychological defenses to make us both feel safe and inhibit change. For countless millennia, our human ancestors would only make changes when threatened with slow starvation or death. Now you know the reason change is so hard to make when things are going well and why we so often engage in self-sabotage.

According to the US Social Security Administration, “About one out of every four Americans who are sixty-five years old today will live past age ninety, and one out of ten will live past age ninety-five.” Your brain interprets this as, “Hey, here is another reason to just keep working with the patriarch and not change what I do or how I do it to accommodate the matriarch.” Unfortunately, because of our confirmation bias, our brain fails to carefully analyze this statistic. Examined another way it says three out of four Americans now sixty-five years old won’t live to be ninety.  Further, the one person who will live to be ninety-five pushes the averages to higher ages.

Think of it like this:  you have four clients who are sixty-five and three die tomorrow. If the fourth lives to ninety-five, the statistic would still be true.  And the harder your mind tries to “prove” this wrong or believe it will never happen to you, the more evidence you have of how hard your mind works not to have to make a change.

Working with both spouses places you as the Financial Advisor in a far better position to retain the accounts of a wealthy family after the death or incapacity of the patriarch. Further, because you have retained the accounts, the transfer of assets creates the opportunity to capture new revenue streams from additional products and services tailored to the other stakeholders of the family. The matriarch, who now controls the assets, will obviously want the stakeholders to open their accounts with you so she can keep track of what is going on.

 The graph below presents the carrot for changing how you define the client. Take a married couple both 65 years old, currently using $5,000 worth of your services each year.  If the patriarch dies at age 70, this means the cashflow to your practice will be $25,000 ($5,00 for 5 years) because we know women change advisors almost 100% of the time upon the husband’s death.  But the account will cashflow $125,000 ($5,00 for 25 years) if you have a great relationship with the matriarch and she lives as the statistics suggest.

Every good thing that can happen to the future of your practice springs from this critical first change, involving both spouses in the client relationship.  Stay tuned to learn how to serve the other stakeholders of the family and capture the rest of the economic value of your book.


To learn more about this topic, register for our Certified Wealth Strategist®  (CWS®) Designation Program.

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Contributing Writer: Subject Matter Expert Charles McCain

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