Profiles in Client Engagement Profiles in Client Engagement Winter 2013 Sudden Decision Makers: Empowering Women in Transition The loss of a spouse or end of a marriage is a uniquely stressful situation that pulls both husbands and wives into a swirl of emotional challenges, but wives may often face a sudden additional challenge: being the sole financial decision maker for the first time. Many women in these situations may ask, “Who can I turn to for guidance?” And just as suddenly, your role and responsibility as a financial advisor will have grown. “Under such circumstances, women may place a high premium on three advisor qualities: listening, perseverance, and compassion,” says Russ Thornton, Vice President and Wealthcare Advisor, Wealthcare Capital Management®, Inc. A thorough understanding of such major transitional moments may help you achieve a plan for your clients with the least amount of anxiety. According to a Spectrem Group report, women in transition are more likely to rely on an advisor than men are, and with this market relatively untapped, advisors may experience increased profit and customer gain if they know how to engage women appropriately.1 1 Spectrem Group, Women In Transition: Widows and Divorcees, 2015. Inside Beginning the process Focusing on what you can control Being a client advocate Actions to consider 2 3 4 5 “ nder such circumstances, women U may place a high premium on three advisor qualities: listening, perseverance, and compassion.” — uss Thornton, Vice President and R Wealthcare Advisor, Wealthcare Capital Management®, Inc. . Loss and divorce are, regrettably, common. It is important for advisors to identify women as financially literate and help empower them as decision makers when it comes to their assets.2 A thoughtful, compassionate financial advisor may be in high demand in these situations. We met with more than 20 financial advisors, and uncovered some strategies to help women address financial issues associated with divorce or the loss of a spouse.3 In this report, we explore those strategies as evidenced in the approaches of three of your peers, revealing new ways that may help to better serve your clients, retain them as they undergo a pivotal life transition, and ultimately help grow your business. Firms in focus: The Wellborn Group, SunTrust Investment Services, Inc. Wealthcare Capital Management ®, Inc. VennWell LLC Home Atlanta, Ga. Richmond, Va. Lake Forest, Ill. Leadership Debbie Riney Smith, Private Wealth Advisor, Senior Vice President Russ Thornton Colleen Chandler, Managing Director Assets under Management (June 30, 2015) $550 million $1.2 billion $240 million Typical Clients High-net-worth families; average client size of $1 million Affluent and high-net-worth baby boomers; average client size $500,000 High-net-worth families; average client size of $2 million Beginning the process “ ivorce or the loss of a spouse D changes everything. Income, obligations, taxes. Even family and friends.” — ebbie Riney Smith, Private D Wealth Advisor and Senior Vice President, The Wellborn Group, SunTrust Investment Services, Inc. Eight years ago, Debbie Riney Smith joined a financial advisory practice that served mainly male business executives and lawyers in the Buckhead area of Atlanta.

Few of their wives shared in the financial advisory relationship. “Changes like divorce or loss are simply part of life,” Riney Smith says. “As I began working with these women directly, often under very trying circumstances, I discovered that they wanted not just someone they could trust, but someone they could talk to.” Her prior 15 years of experience working in the financial services industry helped the practice better understand the unique needs of women in transition, and, over time, develop a comprehensive service offering. “Our practice went from a world in which husbands controlled everything — from paying the bills to overseeing investment decisions — to a world of empowered women working with us and leveraging our expertise,” explains Riney Smith. What’s her approach? For starters, many of the women Riney Smith works with need a lot of education and help in building their financial confidence, and third-party research supports this. Women in transition are more willing to take the necessary steps to gain the education needed, but they need someone to talk their language in order for them to fully understand. One woman in transition said, “I’d like advisors to start slowly educating me so that I can make more informed decisions.

Teach me — I want to learn more.”1 “It’s not uncommon for these women, many of whom are in their 50s or older, to discover for the first time that they have to pay the bills, put together a budget, and manage their investments,” says Riney Smith. “In addition to financial matters, they’re often looking for ways to rebuild their social circles.” C  enter for Talent Innovation, “Harnessing the Power of the Purse: Female Investors and Global Opportunities for Growth,” May 1, 2014. 2 3 2 R  esearch conducted during the period of July 16, 2012, to September 28, 2012, by Excella, Inc., an independent third-party marketing firm, on behalf of Fidelity Investments with 20 participating firms. . Some steps toward empowerment To help these women begin the process of empowering their lives, Riney Smith takes the following approach: • Locate and value all assets. “We had a widow in her late 50s who didn’t even know where her money was,” recalls Riney Smith. “We went through boxes at her house to figure out what she had and where everything was. It’s an all-too-common occurrence, in which a financial advisor’s help can be crucial.” • Listen to clients’ lifestyle needs and concerns. Riney Smith says, “My clients ask questions like ‘Can I afford a new roof?’ ‘Can I afford to take a vacation?’ ‘Should I refinance my home?’ They also worry about whether they can still participate in their social circle, whether it’s country clubs or expensive dinners.

We work with them to map out what their lifestyle needs and options are.” • Develop a budget and financial plan. Riney Smith puts together a comprehensive financial plan, including a detailed budget. • Build a portfolio that aligns with the client’s risk tolerance. “Focus the investment conversation on risk,” Riney Smith says.

“This approach helps women get comfortable with the practice’s investment process, and builds trust.” • Let clients lead the conversations. For client meetings, Riney Smith makes a point of starting with questions like, “What’s on your mind these days?” “What concerns do you currently have?” and “What do you want to cover today?” She says, “While we [advisors] have our own agenda of what we need to cover, I let [the clients] lead.” • Check in monthly. “I simply ask ‘How are you doing?’ or ‘Do you understand your statement?’” notes Riney Smith.

“Those questions then lead to deeper conversations about how [clients] are feeling about their money.” Listening to a bereaved client: a case study “People deal with grief on different timetables,” observes Russ Thornton of Wealthcare Capital Management. “Some work quickly, others slowly. “I was introduced to a widow whose husband was a doctor, and he died suddenly. She had a large liquid estate with money in more than 20 accounts across an array of financial institutions.

She was aware of the need to consolidate her accounts in order to better manage her money, but her emotions often overwhelmed her. We had six to eight conversations, and each time she became so distraught she couldn’t continue. This was a recent event; in fact, she’s not yet ready to make any changes. “Our firm thinks of it this way: It’s not an emergency situation.

She’s not at risk of losing a substantial amount of money. The process to bring her on as a client could take many more months or even as long as a year. So we take it slowly, without a timetable and with deep respect for the enormity of this event in her life.” When she can, Riney Smith tries to help out in ways clients don’t typically expect.

For example, she hosted a cocktail party and dinner for a client’s widow group (without asking for any business). “I knew my client needed a jump-start to reengage with friends,” Riney Smith says. “And this was an easy way for me to help. I had fun, too!” Focusing on what you can control “ ven in the best of times, money E is an emotional topic.

I know from firsthand experience that, under difficult circumstances, those emotions can have a powerful, often very negative, effect on decisions we make.” — uss Thornton, Vice President R and Wealthcare Advisor, Wealthcare Capital Management Based in Wealthcare’s Atlanta office, Russ Thornton applies what he learned from his parents’ divorce while he was in college. “While my mother received a sufficient financial settlement, she had no experience managing money, let alone the day-to-day family finances,” Thornton explains. “I saw the decisions she made and how things could have been different had she worked with someone who recognized her fears and respected her vulnerabilities. It’s a big part of why I’m a financial advisor today. 3 .

“Talking is the key with all clients — but especially with women making these kinds of transitions,” Thornton continues. “We worked hard to develop a practice that gives women a safe environment to talk about what’s important to them.” Thornton emphasizes first helping women identify their priorities, concerns, and goals, and then walking through the trade-offs of the decisions they may need to make. “It’s the key step,” Thornton says. “Once they unpack those concerns, they’re anxious to hear what you recommend, and you become eager to help.” Thornton also notes, “While many women can identify with similar concerns, their life stage and personal situation can affect the factors to consider in the planning process.” Calming fears Once a financial plan and investment strategy are in place, Thornton uses the following approach to keep clients informed and to help mitigate their worries: • Stress test the financial plan. Thornton finds that clients are reassured by an analysis using realistic market and economic cycles. “It can obviously be tricky explaining the Monte Carlo method,”4 he notes, “but in the end, clients find it reassuring.” • Watch for underspending. Underspending by his clients is a common theme that he identifies in these conversations. “We may agree that a client can pull out $50,000 a year and live comfortably, along with Social Security and a pension,” he says. “But she’ll opt to pull out $10,000 a year from her investment account.

I’ll point out that she’ll leave quite a lot to children and grandchildren, but that she could live a richer family life today.” • Stay in touch. Like Riney Smith, Thornton uses a high-touch, high-frequency approach to communication. He meets with most clients four times per year, and also reaches out monthly via a phone call or email. • Help clients think about the purpose of their money.

At the end of the day, Thornton believes that he adds value for all clients — men, women, and couples — by helping them clarify their objectives for their savings. “What is it for?” he asks. “If I’m speaking to a widow, I’ll say, ‘Is there a way you would like to honor your husband through charitable giving?’ It can be a wonderful method for opening up the lines of communication.

Moreover, this conversation helps her recognize that now it’s time to come to terms with what is important,” Thornton says. “It’s empowering for her, and a very gratifying experience for me.” Being a client advocate “ any of my clients going through M a divorce have a tremendous amount of money at stake. Most of my female clients are married to executives, so private or public stock is often involved, making the divorce even more complicated.” Colleen Chandler began her career as a commercial lender before becoming an investment banker at a Wall Street firm. Soon afterward, she worked as an advisor to a very wealthy family she had encountered during her banking years. “I truly enjoyed that experience,” Chandler says.

“It’s what inspired me to make the transition to an independent financial advisor.” Chandler claims her experience over the years in analyzing SEC disclosures and private transactions, as well as her expertise in different types of liquid and illiquid securities, prepared her to work with women going through a complex divorce. “It certainly helps that I’ve walked through the firestorm of divorce myself,” Chandler says. “I can relate to every dimension of the experience.” In her role as a client advocate in divorce proceedings, she tries to help all parties find the best financial solution, even though her first responsibility is to her client. “To be an effective client advocate, you have to pay attention to the details,” she says. “Divorce requires a lot of subject-matter expertise, plus the ability to see the big picture.” “You also need to understand the people: your client, her spouse, the tax and business professionals, and, importantly, the legal team,” Chandler explains.

“I think of it as a chessboard. If you understand the players — where they stand and where they want to be — you can make good moves.” — olleen Chandler, Managing C Director, VennWell LLC M  onte Carlo method is a problem-solving technique used to value and analyze complex instruments, portfolios, and investments by simulating the various sources of uncertainty affecting their value, and then determining their average value over the range of possible outcomes. 4 4 . Evaluating different assets in a divorce Chandler describes a handful of financial assets you need to evaluate in a divorce: • Retirement plans. Says Chandler, “Not all retirement plans are easily divided; nonqualified executive plans may need to be offset against other assets. Further, the tax impact of access to retirement funds can be an important consideration, especially for those under age 59½.” • Stock options or restricted stock. Chandler notes that the greatest difficulty with these assets often comes after the divorce, when the already divided options are exercised or the shares are unrestricted. If an advisor can offer operational and tax ideas ahead of time, it may help prevent misunderstandings later. • Private equity.

It is important to understand the potential cash flows involved in these investments. “Does the divorcee have money for future capital calls?” Chandler asks. “While such deals could be very lucrative in the future, they are risky, as payouts are uncertain.

Can the client afford the risk? “Leveraging my expertise helps clients come up with the best way to reach a satisfactory solution,” Chandler says. “When financial alternatives are positioned in a reasonable and wellthought-out approach, all sides can best reach a workable settlement. As advisors, it is imperative that we are thoughtful and thorough in what we put together.” A crash course in Finance 101 Chandler sums up her experience in this way: “At the end of the day, we’re helping women make it through a crash course in personal finance, investment, tax, and estate planning — all while navigating through a highly emotional time in their lives.

Educating our clients is critical, as well as coaching them on how to be effective communicators. “We do a lot of role-playing in our office,” she reports. “It’s crucial to prepare our clients for important conversations with a spouse or with their attorneys. “It’s often their first experience having such a conversation,” Chandler notes. “And they are often pleasantly surprised that they not only can do it, but do it successfully.” Actions to consider We hope these real-life examples can help you better prepare for the challenges of a client becoming widowed or divorcing a spouse. The following principles summarize some best practices of the advisors we interviewed: • Listen to, educate, and coach your clients so they can emerge stronger and more independent.

As all three profiled advisors demonstrated, applying “softer skills” to your relationships with women in transition can make a tremendous difference in their lives. Consider how Debbie Riney Smith and Russ Thornton listened to, educated, and empathized with their clients, and, in turn, empowered them to rebuild their lives and make informed financial decisions. The divorce process: roles an advisor can play According to Colleen Chandler, managing director of VennWell LLC, advisors can offer valuable expertise when working with clients going through a divorce, but it is important to be clear on the role of the advisor. You may want to consider these three potential roles: •  xpert to a third-party E professional. Typically hired by an attorney, advisors in this role may be charged with developing a deep understanding of the couple’s lifestyle and spending prior to the divorce, and they may even prepare to testify on behalf of one of the parties to the divorce. Alternatively, an advisor can also be relied on to be an expert in examining a variety of financial records, which may include brokerage and banking statements, and documents to evaluate financial assets. •  ediator.

In this situation, the M advisor is hired by the couple to assist them in coming to an agreement on the division of assets and in structuring payments that occur between the parties over time. Both sides have to be informed and capable of standing up for their own position, because the mediator is not an advocate for either party to the divorce. As Chandler says, “It’s important for women to have full disclosure and a clear understanding of all assets, earnings information, and spending requirements in order to negotiate a fair settlement in these situations.” •  lient advocate. Chandler C typically plays this role, in which she helps her client prepare for the divorce process by gathering all the essential information and developing a financial strategy.

“In this role,” Chandler says, “advisors need to also review all financial proposals presented by the other side in order to find common ground, and counsel their client with regard to implications and trade-offs in both the near and long term.” 5 . • Ask yourself: Are you as willing and able as Colleen Chandler to coach your clients in speaking to their husbands for the first time about money? Imagine the ways you can empower your clients. Start the process one step at a time, with one client at a time. • To help build trust, explain how the level of risk in certain investments can affect the achievement of overall financial goals. Uncertain economic times remind all advisors of the importance of explaining reasons for your investment choices and how the amount of risk inherent in these decisions can affect your clients’ future. As Debbie Riney Smith and Russ Thornton both emphasize: – Proactively explain why you have chosen specific investments, and further explain why you still like them, even when markets are volatile – Show your clients how big of a drop their portfolio can withstand, so they understand how they’re prepared – Continually demonstrate for clients how their investments are progressing against their longterm plans 6 • In a divorce proceeding, use your expertise to think and act strategically.

Effectively serving clients going through a divorce requires an understanding of the separation and divorce process. For high-net-worth clients, you also need to understand an array of complex financial instruments, including how they can be monetized for your client. While not all financial advisors can easily become an expert in all types of complex securities, you can play to your strengths.

If you’re an expert with retirement plans, you may want to consider focusing on helping divorcing couples with large plans. If you work extensively with stock options, you may want to consider serving corporate executives and their spouses. Assess your knowledge base, and then act accordingly. .

7 . For additional information, please contact your Fidelity representative or visit Go.Fidelity.com/insightsonadvice to learn more. For investment professional use only. Not for distribution to the public as sales material in any form. Fidelity Investments does not provide advice of any kind. You should conduct your own analysis, review, and due diligence based on your specific situation. You are responsible for evaluating your own specific needs and making appropriate decisions.

Those decisions may be based on these and other factors you deem relevant. The information provided herein is not meant to be exhaustive of all possible options you may consider. Content related to the advisory firms profiled was provided exclusively by The Wellborn Group, SunTrust Investment Services, Inc.; Wealthcare Capital Management, Inc.; and VennWell LLC. These firms are clients of Fidelity Institutional Wealth Services (IWS) and are independent companies, unaffiliated with Fidelity Investments.

Their business needs and results may not reflect the experience of other IWS clients. Their input herein does not suggest a recommendation or endorsement by Fidelity. There is no form of legal partnership, agency, affiliation, or similar relationship between an investment professional, the third parties, and Fidelity Investments, nor is such a relationship created or implied by the information herein.

The opinions expressed by the third-party speakers are their own and Fidelity Investments is not responsible for the content of their remarks. Information is as of June 30, 2015. Third-party marks are the property of their respective owners; all other marks are the property of FMR LLC. Fidelity Investments Institutional Services Company, Inc., 500 Salem Street, Smithfield, RI 02917 Fidelity Clearing and Custody provides clearing, custody, and other brokerage services through National Financial Services LLC or Fidelity Brokerage Services LLC, Members NYSE, SIPC 200 Seaport Boulevard, Boston, MA 02210 © 2015 FMR LLC. All rights reserved. 629420.3.0  1.952911.102 0915 .