Ken Kehrer (Kehrer Group) and Luke Alchin (RFI Global)
Part of the received wisdom in the financial services community is that 70% of widows change financial advisors after the death of their spouse. Where did that notion come from? We have looked exhaustively for the source of this estimate, and found that, while it is ubiquitous in the industry literature, usually no source was cited. In the rare cases where there was a citation, it was to another article that reported this “fact, “again without a citation. We were surprised that in the years that this finding has been around no one has looked at the data to verify it. Until now.
We turned to RFI Global’s MacroMonitor, the comprehensive database on consumer financial decisions that has surveyed over 4,000 US households every other year since 1978. Using a national representative probability sample, this survey is representative of the 7.3 million widows in the US (5% of all households) and the 1.6 million who are recent widows – widowed in the last two years (1.1%).
We combined the data from four waves of the survey to have a sufficient sample size. We found that 13.7% of recent widows had fired or changed their advisors. A lot fewer than 70%.
On the other hand, 4.7% of other households fired their advisor in the past two years, so widows are almost 3 times more likely to move on from the family’s advisor.
How did the financial services community, obsessed with accurate data and verifying the numbers, get to the point of accepting, and boosting, the 70% estimate?
We chased the many references to the study down a rabbit hole and finally found a citation in a 2015 article to a 2011 study.
The original study is out of print, and the firm cited as the author disavows the study, saying that the study should not be credited to them. So, we do not understand who was in the study population, how they were selected, and the extent to which they are representatives of widows in general. One clue is that the original references to the study described them as “wealthy” widows, a distinction lost in the later references to the study.
Not that we’re criticizing the original study, just that the findings have probably been misinterpreted. Our best guess is that the study population was a group of widow beneficiaries of life insurance policies, and that the “financial advisors” were all the life insurance agents of record on the policies. In that case, it is quite understandable that the widows would move on from the agents, thinking that they no longer needed a life insurance agent. But this is our speculation. If anyone has seen the original article, we’d appreciate being enlightened.
While the original study was widely misinterpreted, this is probably a case of no harm, no foul; to the extent that the findings encouraged financial advisors to better serve widows, or focus more on both the wife and husband of a family of couples, it might actually have done some good. Because widows are more likely than other clients to change advisors.
About RFI Global
RFI Global is the only global data and insights company focusing exclusively on financial services. We empower financial service leaders with the market intelligence they need to drive innovation, enhance customer experience and accelerate growth. Partnering with the world’s top financial institutions, our expert team delivers tailored insights through a unique hybrid syndicated approach, drawing from over 200,000 consumer and 60,000 business interviews each year.
Find out more about RFI Global here: Data and Insights for Banking and Financial Services | RFI Global
About Kehrer Group
Kehrer Group is the bank and credit union financial advice community’s trusted partner for original thought leadership, insight based on data, and strategies that drive success. Kehrer Group’s legacy of research and analysis has advanced the delivery of investment services in banks and credit unions and shaped the industry into what it is today. Kehrer Group’s principals meld the wisdom gained from its long history in the industry with cutting-edge analytics, data that is robust and diverse, and a deep understanding of the key drivers of performance.
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