By Nicholas W. Stuller
Her father thought buying life insurance was like “betting on death” as he used to say. Sadly, he died when Joanne (not her real name) was nineteen and her mother was thirty-nine. His passing was devastating, of course, but not having life insurance on top of not filing his taxes for the prior two years added extraordinary burden to the family he left behind, which included losing their house. They did not have an advisor at the time of his passing—moreover, Joanne’s mother was not involved in the family finances at all.
Joanne’s mother attended a widows’ support group, where she met a female financial advisor from American Express Financial Advisors, now known as Ameriprise. The advisor gave talks about women being self-sufficient and the need to be financially literate. Joanne’s mother hired the advisor, and after remarrying, they were discussing her new husband’s plan for retirement from the San Francisco police force coming up in two years. The advisor had bad news for the couple: he could not afford to retire in two years as planned. The issue is that he was divorced, and his ex-wife would be entitled to half of his pension. He needed to work another seven years to contribute to his retirement plans. So, he took the advisors guidance, went back to work and saved, and seven years later in 1989, he was able to retire successfully. The plan, along with investing in the right annuity contract, one whose principal was absolutely guaranteed, secured the couple’s retirement. Almost thirty years later they are still comfortably retired, and still use an Ameriprise advisor.
In 2018, Joanne now had her own challenge. She and her long-term boyfriend were grappling with issues as an unmarried couple. Issues involving assets, liabilities, sudden ill health or death, which are particularly troublesome for an unmarried couple because, for the most part, one is not recognized under law as having rights if unmarried. Particularly important for Joanne’s boyfriend was his work, as he is in the arts, and his body of work would not be able to be managed by Joanne should something happen to him. The solution was to get a Domestic Partnership Trust, which afforded rights to each and allowed them the flexibility to combine and access the assets as they saw fit. While a financial advisor was not involved, Joanne shared with me that for couples at certain asset levels, her attorney strongly advised that a financial advisor should be involved with the drafting attorney for the benefit of the couple.
Joanne’s story first appeared in my book and I am sharing it again because it is such a cautionary tale on multiple levels. Ignoring the potential for tragic events and its unintended ripple effects is a lesson that always bears repeating. Hiring an outside expert to guide you through tumult is another, and happily for Joanne’s family the advice continues to pay off 30 years later and counting.
Nicholas W. Stuller is the Founder and CEO of www.MyPerfectFinancialAdvisor.com, a 30-year veteran of the financial services industry and author of THE TRUTH SHALL SET YOUR WALLET FREE: Secrets to Finding the Perfect Financial Advisor, published in 2018 by Post Hill Press.
