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investor clinic

My husband was a big fan of your columns, and by following your buy-and-hold approach he did very well for us. After I received a $3-million inheritance seven years ago, he invested the money in dividend growth stocks – primarily banks, utilities, telecoms and pipelines – and the portfolio’s value has grown to more than $6-million. Sadly, my husband passed away recently. Also, the adviser my husband was using retired, and the new adviser has dramatically increased the fees to about $30,000 annually (0.5 per cent of the assets), up from $6,000. The previous fee seemed reasonable, since my husband made all the decisions and did virtually no trading. My son, who has more investing experience than I do, says he doesn’t know why we are paying $30,000 to basically “park” our money. One of our concerns is how we would transfer our investments to another adviser or institution. The new broker asked to meet with us recently but it was too soon after my husband passed away – I was numb. Do you have any suggestions?

I completely understand your reluctance to pay tens of thousands of dollars for the privilege of collecting your dividends on a buy-and-hold portfolio. I also understand you’re not ready to sit down with the new adviser or make any major financial decisions so soon after your husband passed away. Many people in your situation feel the same way.

“In speaking with widows over the years, I found that … most are not comfortable tackling larger financial issues until one to two years after their husband’s passing,” Matthew Moccio, a financial adviser in Ancaster, Ont., writes in his book, When the Picture Changes: Gaining Financial Control After the Loss of a Spouse.

His advice: “Take your time. Unless the financial issues can’t wait, you need to work through your grief first. Aside from taking care of day-to-day needs such as paying bills and filing taxes, don’t feel forced to jump right into heavier financial matters until you can focus on them.”

Before you make any decisions, consider what services you are getting from your current adviser. Is tax, estate-planning and other advice included? Do you like the adviser?

When you’re ready, you may end up deciding your current adviser is not the best fit for you. According to Mr. Moccio’s book, about 80 per cent of widows move on to a different adviser within one year of their husband’s death.

Your son raises a good point: Do you even need an adviser? If you want to keep your costs as low as possible, there’s no substitute for opening a self-directed account with a discount broker. Given your particular situation, there are several reasons this may be a good option for you.

First, with a discount broker, you will pay no continuing fees apart from a small trading commission (generally less than $10) when you buy or sell a security. Because you are a buy-and-hold investor, these costs will be negligible.

Second, because you have significant assets, you may qualify for a cash incentive for moving your account. To take one example, BMO InvestorLine is currently offering a $2,000 bonus for accounts of $1-million or more. Since you have many times that amount, it doesn’t hurt to ask for a larger bonus. The worst they can say is no. What’s more, with your level of assets you will qualify for BMO InvestorLine’s highest tier of service, which means shorter wait times when you call, access to more research and better pricing and discounts. BMO InvestorLine is just one example. Be sure to research incentives offered by other brokers. With a portfolio of that size, you are in the driver’s seat.

Third, you mentioned that your son has some knowledge about investing. That’s good. Presumably, he would be in a position to help you, if necessary. You may wish to consider naming him as an authorized trading agent on your account, which would give him the ability to make trades and speak to customer-service agents on your behalf. I know from experience this is an advantage when helping a family member. Of course, you and your son will have to decide if you would be comfortable with such an arrangement.

There are several other things to consider before making such a decision, said Derek Moran of Smarter Financial Planning in Kelowna, B.C. “How well off is the son himself? Does he need money? Is there a risk of elder abuse? Is he the full or partial eventual beneficiary anyway? If she thinks he has the same buy-and-hold perspective that has worked so well, and she trusts him completely, this is likely a good solution,” Mr. Moran said.

As for the transfer process, it’s not as onerous as you might think. Once you choose an institution, a simple phone call to the new broker will get the ball rolling. The institution receiving your account will take care of all the details. You don’t have to contact your old adviser but, as a courtesy, you could send a card or e-mail. What you don’t want to do is put yourself in a position where the old adviser has an opportunity to change your mind. Many people find it difficult to break up with an adviser, but remember: It’s your money and your decision.

With your husband’s recent passing, this is also a good time to make sure your estate-planning documents – including your will and powers of attorney – are up to date. Paying a lawyer with expertise in this area is money well spent.

E-mail your questions to I’m not able to respond personally to e-mails but I choose certain questions to answer in my column.

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