Who Manages Your Money?

One of the effects of the successful accumulation of money is that it takes more time and effort to track and manage your finances.

It’s Simple When You Start
When you are young, typically rather poor and just starting out in the business world you have few assets and liabilities. Maybe you have a bank account, one or two credit cards, a car and possibly some student loans – but not much else.

Tracking your balance sheet and cash flow are pretty simple and don’t require much time. You don’t really have many (if any) investments, nor the money to put into investments.

Then It Gets Harder

As you mature, you get a job (maybe two or three!), more cars, a house – perhaps a boat or an RV and you start putting money into a retirement fund or other investment. Maybe along the way, if you are unfortunate enough to have a relative die, but fortunate enough that they left you an inheritance, you are presented with a pre-selected set of assets to manage.

Now it starts taking some extra time to manage your money. You might spend time researching the selections offered in your company’s 401K, or you might spend time comparing insurance rates on that boat and RV. You have multiple asset classes now, so you might spend time figuring out your net worth and the percent of assets in each class.  One spouse may need to spend time communicating their joint situation to the other via a net worth report, a budget and an asset allocation report.  You and your spouse also may be spending time figuring out your financial strategy, either alone or with some kind of financial adviser.

As the kids grow, you probably set up a 529 plan or look into how to pay for college for them some other way. You may buy a second home or a vacation home. You may start a side business or two – including setting up new business structures (such as a partnership or llc) to hold them.

Later It Can Get Out of Hand

You may have purchased and held many different stocks, bonds, mutual funds, CDs and money market accounts. Things have gotten complex – possibly even out of hand! You have accounts at multiple different financial institutions: your 401K is one place, your spouse’s another; your kids 529 plan accounts; perhaps you have several brokerage accounts and a couple of IRA accounts. With each money market or sweep account comes a check book, debit or credit card. Your business’s each have their own financial picture – with different assets and liabilities.

You may spend time analyzing whether to use a Roth or Traditional IRA, whether to use a flex spending or health savings account and you are trying to teach your kids how to manage their finances, deal with your parent’s finances, be successful in your career and still enjoy life.

How do you manage all of this? Do you hire a money manager? Does your spouse take care of it or you? Do you share responsibility?

Money Management Options

It takes time; dedication and desire; knowledge; and access to research and tools to properly track and manage your financial picture. I have often been tempted to look into hiring someone to take care of this for me.

What kind of professional would I hire? There are: accountants (we have one – but mainly to do our taxes); financial planners (who you might need occasionally to draw up or revise an overall approach to your finances); financial advisers (this term really has little meaning to me because it is used to describe everything from a poorly trained beginning broker to a certified financial adviser); bookkeepers who simply track and record) and money managers who charge from 1 – 3 % of assets under management per year.

Although it would be tempting to just shove the whole financial management over to a money managers, I’ve heard that they just put you in target funds or index funds and suck your money! I’ve tried using financial planners, but they seem willing to offer only pretty generic plans – mainly based on age.

What I would want (if I were going to deplete my asset base by 2% a month!) is private wealth management. I would want a team of people dedicated to my account, looking out for my financial interests by considering the entire picture. The team would watch world events and take advantage or defensive actions based on what is going on. The team would work together to make sure that my assets are tracked and reported to me as I desire. The team would consider tax implications, use alternative investment classes, invest all over the world, handle real estate, collectibles (art , jewelry, cars, etc), help me train my future heirs, provide a forum for us to hold our family meetings and more!

What I am talking about here is typically handled by ultra-rich families using a family office, multifamily office or private banker. But I am not ultra-rich. If I tried using these services with my asset levels, I would be very poor, very quickly!

So like it or not, I guess Hubby and I are stuck with doing it ourselves, with the occasional help of some kind of planner or adviser. I will continue to strive to spend adequate time and effort on our personal financial situation – to track and manage our portfolio.

I spend at least 5 hours a month just tracking and should be spending at least 10 more researching, planning and investing. How much time do you have to spend to manage your money?