How to Prepare for a New Family CFO

If your family has a designated Chief Financial Officer (CFO), the person who manages the household finances, you’re not alone.  It’s not uncommon for one member of the family to accept the responsibility of managing the money, paying bills, choosing investments and everything in between.  An ideal family CFO would keep the family up to date on its financial state, making sure everyone who needs to know what’s going on does, in fact, know what’s going on with the money.  

Eventually, it will be necessary to appoint a new family CFO.  Perhaps the catalyst for change will be a divorce or separation, a death or a decline in heath.  Ultimately, change is inevitable, and your best line of defense against future financial chaos and confusion is to plan and prepare.

Here are three essential steps to ensure a smooth transition to a new family CFO:

Step 1:  Don’t wait to engage.  Get to know all the members of the family’s financial team.  Sit in on meetings with bankers, family attorneys, wealth planners, accountants and anyone who plays a role in directing the path of the family wealth.  Make sure you know the team and that they know you.   

Step 2:  Ask questions.  The more you know, the better.  Ask your family CFO about income sources and debts.  Understand how bills are paid and from which financial institutions.  Know where important documents are stored and how to access them.  Obtain copies of estate planning documents and life insurance policies.  

Step 3:  Document everything.  As you ask questions, make a list of the information and review it for accuracy at least twice a year.  Maintain updated records of these vital components of your financial roadmap:

• Accounts:  Know how to find your money.  Keep a list of all bank, insurance, investment and cash app accounts like Venmo, CashApp and PayPal.
• Income and expenses:  Be informed of all income sources, including investment income, rental income, pensions, retirement, Social Security and similar.  Familiarize yourself with all financial obligations, like mortgages, auto loans, utilities, subscriptions and health insurance payments.  
• Financial professionals:  List the names and contact details for all members of your family’s financial team, including accountants, attorneys, bankers, lenders, wealth planners, insurance agents and estate planners.
• Legal documents:  Store hard copies of your legal documents—like wills, Power of Attorneys, health care directives, trusts, insurance policies, and similar—in a secure location, like a fireproof safe or a safe deposit box.

As a Personal CFO, I help families create a strategic plan to prepare for changes like this.  If you would like to more information about how I can help you, please schedule a complimentary consultation call:  https://calendly.com/forecastlefinancial/complimentary-consultation.