A longtime family friend just lost their spouse unexpectedly.  Their passing is crushing for all of us, especially the surviving spouse of nearly 30 years.  They were very close to each other, outgoing and fun to be with.  Life can change in an instant.

I love EVERY day.  I’m privileged to be in the situations my wife and I are in, including; financially, relationshipally(?), and healthy.  I write about “thoughts of LifeInFIRE.”  I feel most of my posts are on the positive view that I see, and maybe that’s how I present the views around me to myself.  If you ask me, positive helps healthy.

Our friend is strong and healthy, but is now living in their home by themselves.  I cannot imagine the emptiness around them.  At this point, it is their new-normal, that’s just a fact.  A crappy fact.

I chose to offer my experience with finances/structural stuff having been through similar losses for my mom and mother-in-law.  I just wanted to take some pressure off their plate giving them one less thing to worry about.  My offer was accepted with a “whew, I have someone 100% on my side to help out.”  I first said “there is no need to do anything financial right now, no decisions to make.   Don’t do anything for 6 months.”  That relieved a giant stress off our friend.

I gave some ideas to settle in to the new-normal life.  Review some interests that they previously had.  I said to lean on your kids for companionship.  Always take advantage of your friends who have been there, and others who are extending themselves more now.  (I’m really not a great emotional person, but I’ve seen great people really come to help over time).

Now, much of my strength is financial.  I’m able to look at spending/earning structures and see the path ahead.  Luckily, our friend is comfortable.  They were smart to save and plan for the future and enjoy life together all along the way.  That is so important because when this sucker punch happened, the passing was the main punch.  There was no follow-up second financial-crisis punch.  There should be little stress on the financial side, having to panic over how to pay the bills now and into the long future ahead.

Multiple times I’ve seen the benefits of you planning for your life partner surviving you if you should you pass first.  Your partner will not feel a constant month-after-month or year-after-year attack from bills they cannot handle.

In our friend’s current situation, there are some decisions to be made.  Some account renaming, consolidation, trustee location type decisions, but those can wait.  The bills will be easily paid because of lifestyle planning for the past few decades.

In Comes the Financial Planner…

Having said all of that, I was able to attend the meeting their new (fiduciary) financial planner set up to “review” the accounts.  This was OBVIOUSLY an attempt to pull EVERYTHING into his Assets Under Management model, included taking lump sum rollovers from defined benefit pension plans.  No account seemed to be outside the scope of “I can earn your more if I manage it”  (hmmm, “can you guarantee that in writing?”)

The ideas I asked:

• Should they keep their 401k and not roll over to an IRA (they are not yet 59 1/2 but separated from their previous company at 55)? Matter of fact, this acct was quickly rolled over to an UAM IRA before I could question the action.  Now it’s a 72t SEPP hassle versus a flexible “normal” 401k withdrawal.
• Should they pay off the small amount of 5.75% mortgage?
• Should they take advantage of the 12% federal income tax bracket and convert some qualified account money each year, before social security payments and IRA/RMD withdrawals begin?
• Shouldn’t they consider taking the pension payments from the large stable company, rather than rolling it over to an IRA?
• What if they feel more comfortable with a little more in their (non AUM) cash emergency fund than in their investment account?
• Should they put $6500 of her work earnings into a Roth since there is already enough money in the cash account?

EVERY answer was no, except the Roth was a maybe—maybe because the Roth would still be AUM fee-able.   All other options lowered the amount of AUM.

In no way do I feel these answers were “in their best interest” but much, much more “suitable situation” answers.  Those are not fiduciary responses in my option.  To be sure, the 401k to IRA conversion the planner did clearly also shows an AUM strategy.

I can see how leaving your partner setup, with a list of accounts, and a simple strategy upon passing. (Love Letter)  Or at least having a financial planner that isn’t driving his AUM straight up.

Did I mention the fact that the AUM percentage fee would be more than our friend’s yearly gross from their part-time employment!?  How the presented “financial plan” that showed 85% success slyly listed the part-time income earning period as until “end of life.”  One way to make the plan “successful” was for our friend to work 4 days per week until death.  DO NOT TRUST AN ADVISORS PLAN IF YOU DO NOT UNDERSTAND THE VARIABLES THEY USED TO MEET THE SUCCESS PERCENTAGE.

*** Nothing in this article is to be construed as financial advice.  I am not a financial planner, nor do I pretend to be.  You should always consult your own professional when seeking advice.