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When a Simple List Goes a Long Way

March 10, 2017

This time we hear from Brian Kuhn, a financial planner with Fulton, Md.-based PSG Clarity. He describes a technique for helping clients take inventory of their financial assets so they can better plan for their futures.

Early in my career I met with a couple who had a general sense of their net worth and assets but were surprisingly unclear on the details. They had a number of different accounts and were unsure of their worth. Also, the wife clearly had less of an understanding of their retirement investments than the husband.

Even more worryingly they had lost sight of the goals they had in mind for certain assets. What were they trying to accomplish? Were they targeting certain funds for certain expenditures, like trips, charity, children or unexpected health costs? When I asked these questions they didn’t always have an answer — or when they did, they were on different pages. This meant they risked missing goals and ultimately compromising their financial future.

I asked the couple to make a list of all their financial assets and what they were worth — nothing fancy, no complicated spreadsheets, just a list using pencil and paper. I thought it was important that this couple see the whole picture right in front of them. Then I asked them to write down their goal for each asset. Doing so helped them get a sense of where they were and spurred some important discussions about where they were going.

Over the years I’ve met many other couples like those early clients. Many people lose track of their financial assets throughout the course of their lives. Maybe they get married and start a family, get involved in their communities or take on more responsibilities at work. Any number of things happen to people that complicate their lives and distract them from their financial goals. Indeed, for many people, financial goals are often the last thing on their minds as they juggle the many day-to-day demands placed on their time.

In the meantime, they accumulate various accounts and assets, and the details start to fade from memory. People may change jobs and start new 401(k)s; they may move and stop receiving statements in the mail. Maybe someone has a need for a Roth IRA at some point, in addition to a traditional IRA that’s already held. A family could have multiple savings accounts earmarked for their children, or for specific goals and plans; for example, some people like to tuck money aside for vacations, or for a down payment on a new house.

Brian Kuhn

And then there are the other aspects of a portfolio, such as insurance plans. With so many moving parts, it can be easy to get lost.

Getting clients to reconnect with their assets — and their goals for those assets — isn’t just about making sure they know what’s happening with their money. It’s also about keeping clients in sync about the purpose of those assets, and making sure they’re on the same page with their plans for the future. People’s financial goals change over the years. Encouraging clients to take the simple step of identifying the purpose of each asset helps people get their investments back in line with their plans.

People often ask for a meeting because they want to see if they are on pace to retire. That may be the goal of the meeting, but you have to get things organized first. You can’t get to where you’re going if you don’t know where you are. Asking your clients to make a simple list is a way to help orient them — and you.