Back in the olden days, there was a Public Service Announcement on television at 10PM asking “Do you know where your children are?”
Today, I have asimilar question. Do you know where your money is?
If your answer is “I’m not exactly sure” or “All over the place”, then your financial life might be too complicated!
“H and W” are a husband and wife I worked with years ago.
H and W had a lot of accounts in a lot of places. How many accounts in how many places?
Let’s take a look at a chart I created for them:
They had 16 different accounts at 8 different custodians. A custodian is the institution that holds and protects your assets, such as Vanguard or Fidelity.
One six-figure account didn’t ring a bell with either of them. Turns out it was a mutual fund company that had been acquired and changed names. Believe it or not that’s not the first time I’ve had clients lose track of a large account. Nearly every advisor I know has a similar story.
H and W were an older couple and had started to get a bit overwhelmed. They had a lot of mail coming in (they had not opted for online documents), a lot of documents to deal with at tax time, and multiple Required Minimum Distributions to tend to each year.
In addition, it’s next to impossible to monitor tax efficiency, overall asset allocation, and make other important investment decisions when a portfolio is in this many pieces and places.
Lastly, they realized that someone was going to have to deal with this – either them while alive, or their heirs after they passed away.
So we rolled up our sleeves and got to work moving and consolidating accounts.
Will you leave your grieving heirs a complicated stew of accounts?
If your financial life has become too complicated, tackling it can seem daunting. But like I told H & W, the way to eat an elephant is one bite at a time.
Begin by making a list of all your accounts. For each account, include the account number, the type of account (IRA, Roth IRA, joint, etc.), the custodian (location) of the account, the account owner(s), and the current balance. Once complete, you can start making decisions about reducing the number of accounts and custodians.
Simplify your accounts, simplify your life, simplify your taxes, and simplify the administration of your estate after you pass away. Your heirs will thank you!
