We all experience events or milestones at specific stages in our lives for which we plan, that we anticipate or with which we must deal after the fact, and those stages are all important in terms of the implications for selling bank products.
Single parenting is a major life event for many Americans.
The single-parent mom, dad or adoptive parent represents a sizable “life-event” opportunity for your bank. Their status may be the result of separation or divorce, death of a spouse or adoption of children. The numbers are huge.
• More than 12 million households are headed by a single parent, an increase of 73 percent from 1980. Today, nearly 28 percent of U.S. children are being raised by a single parent.
• There are some 9.8 million single mothers — divorced, widowed or never married — in the United States.
• Of women who head families with children under 18, 938,000 have a bachelor’s degree or higher, up 79 percent from 1985.
Financial concerns for single parents are similar to those affecting two-parent families: funding children’s college educations, having adequate insurance, saving for retirement, budgeting and estate planning. However, the differences are substantial.
The single parent is usually the only breadwinner, and the emotional stress is significant. With only one income, more demands are placed on a larger portion of the parent’s income. It’s even more essential for single parents to pay close attention to how they spend money to make sure that the steps to take care of immediate needs and long-term financial goals are met.
Financial challenges facing single parents
Personal adjustments in employment, housing and child care. Often, single parents need advice on and help with child care from their parents, grandparents and organizations such as their church. Employer dependent-care benefits should be reviewed. Child-care tax credits should be explored, if paying for child care.
Financial planning and budgeting. Single parents may need help in dealing with unexpected changes in expenses and income.
Separation strategies. Single parents may need financial advice about working with their divorce attorney on settlements and child support.
Revised investment strategies and estate planning. Change means revised long-term goals using current assets and assistance from parents and grandparents.
Review of beneficiaries. Sometimes overlooked is updating retirement accounts, other savings and investment accounts, life insurance and health insurance policies.
Family issues. The immediate or extended family may not be supportive of the single parent. Or it may be complicated because the single parent is caring for his or her parents.
Financial and lifestyle challenges are more difficult for divorced single parents. They include the possibility of significant changes in lifestyle and careers. For example, a nonworking spouse may have to work or return to school. The noncustodial spouse (usually the father) may provide economic assistance.
Both single parents and noncustodial parents need to organize their financial records and prepare new budgets, as well as deal with the possible loss of health, life or disability insurance coverage.
Stocks, bonds and mutual funds to be divided need to be evaluated with regard to presale and postsale value, taking into account tax levied on gains. Investment strategies need an overhaul based on the new situation, covering current assets, any continuing divorce payments and assistance from parents and/or grandparents.
Enormous opportunities exist for banks that help customers through major life events. Doing so builds customer loyalty through an understanding of the customers’ needs and credibility by expanding the scope of advice giving.
Life events such as single parenthood give rise to relationship opportunities that encompass both advice points and actions of other kinds in which an adviser can engage to create or build relationships with clients.