Who’s the family CFO?


“I don’t know anything about my finances,” said a 76-year-old man in a recent email. It’s not that he’s neglecting them, but rather that his 75-year-old wife is the chief financial officer of the family. He now feels compelled to understand what’s going on with their rental properties, their investments and even the bill-paying. His wife has been reluctant to include him, fearing that he will make the process more complicated and, after all, hasn’t she been doing a good job? Every couple needs to allocate certain tasks, but you aren’t doing your partner any favors by withholding information. In fact, you are doing them a major disservice. Sharing financial information and responsibility can be empowering and, more importantly, it will help the uninvolved spouse understand what he or she would face if you were no longer able to act as the family’s CFO.

Start by going over your  household balance sheet – what you own and what you owe. This is an excellent opportunity to create the master list of documents necessary to organize your estate, so make sure to note in whose name the asset is held or whether it is jointly owned. Include your bank accounts (as well as user names and passwords for online banking), the contents of any safe deposit boxes (and where the key is located), 401(k) accounts, IRA’s, Roth IRAs, annuity contracts, brokerage account information (with the broker’s name and contact phone number) and a detailed list of savings bonds (or login information for treasurydirect.gov). Also list your house and vehicles (make sure you have deeds and titles) and any debts that are outstanding in your names.

When it comes to monthly expenses, explain your “system” to your spouse. Make sure that both of you know where all of the credit cards, ATM cards, bank statements and checkbooks are located, especially if you are still writing out checks by hand. If you use online bill pay, demonstrate to your spouse how it works. Don’t forget to highlight those bills that are automatically drafted from your bank account.

With the nuts and bolts down, move on to the investment and retirement accounts. If you manage the money yourself, walk your spouse through the most recent statements. Start with the overall objective (“we have a balanced portfolio, which means that we split the risk between stocks and bonds”), and make sure that you explain the different parts of the statement itself. This might sound silly, but I encounter far too many people who throw up their hands and say they just don’t know how to read their brokerage or retirement plan statements.

This process could raise difficult questions for you, too: Do you really have the time, energy and discipline to manage your money effectively? Have you assumed too much risk? Have things gotten away from you? Maybe it’s time to seek guidance from a professional.

For those who already work with a financial advisor or broker, schedule an appointment and let him/her lead the education. Before the meeting, encourage your spouse to engage the advisor and to ask questions. When I was an advisor, I recall a few instances of the “uninvolved” spouse posing questions about the investments that had never been raised before. By doing so, I was able to alter the portfolio to better meet the needs of the couple and to gauge where they stood versus the originally stated goals.

If you are handling the investments on behalf of the couple, but your spouse is unlikely to take over if you were to die, it would be smart to assemble your team now. That can include a CPA, an estate attorney and an investment advisor or broker. Interview these professionals together and make sure that your spouse can build a relationship with someone he or she trusts.

Other important areas of communication are insurance coverage and estate planning, but for now, get cracking on sharing the basics.