In the olden days, before internet banking, families sat down once a month to write out checks to pay the household bills. The previous month’s bank account statement was received and the checkbook was balanced. Investment statement arrived quarterly, so four times a year those accounts would be reviewed. Pension statements and life insurance statements arrived annually, along with tax documents. There was a rhythm of when people sat down and reviewed their finances. With the advancement of technology, I have seen families get away from this structure which has also led to getting away from structured communication about the family finances….both between spouses and even with themselves!
If communication about finances is happening less and less, how are the big subjects like planned giving going to be address? Making the decision to start a planned giving strategy to a favorite non-profit organization can sometimes create waves in families. Spouses may have different ideas on how their lifetime of savings should be spent. Children may feel neglected to have their perceived inheritance go to “strangers”. Even close family friends may challenge the decision based on their own perceptions and generational trauma surrounding money.
For these and many other reasons, the Family Finance Committee can take the emotion out of large financial decisions and get (and keep) everyone on the same page.
Here is a sample Family Finance Agenda:
The Why: details behind account titling, long term financial goals and incorporating planned giving into family finances.
The Big Picture: a one-page snapshot of income / expenses / net worth of the family. Understanding the investments and how they are working towards the family’s financial goals. This isn’t the time or please to drill down on the daily spending unless that is a pain point hindering progress.
Goal Setting: discussing both short and long term goals of the family portfolio and timelines (ensure the risk tolerance matches these timelines). Also, which charitable endeavors can be funded via non-profit donations or direct to the source.
Action Plan: who does what and when. Ideas turn into plans when a timeline is set…setting a goal of when each task should be completed helps turn these financial dreams into reality.
Wrap Up & Next Meeting: do a temperature check that everyone is still on the same page and agree to a timeframe to hold these meetings on a regular basis. Annually vs Quarterly vs Monthly depending on the size and scope of the financial goals.
These meetings should be run with the aid of the family’s financial planner and be attended by the current grantors (the people who created the wealth) and optional, yet encouraged, by the next genadults (the people who would inherit the wealth). Remember to keep it fun yet firm. Maybe you order pizza on a Tuesday or turn it into a family ski weekend? The focus of these meetings is to have transparency between the generations so wealth can move freely and without family fighting.
Fun Fact: The most well-known family to use this concept is the Rockefeller Family. For six generations, this family sets the gold standard for multi-generational wealth planning. They hold formal, routine family meetings and mandate that younger generations attend financial literacy boot camps before participating in family decision making.
Kimberly Enders CFP® CPFA
CERTIFIED FINANCIAL PLANNER®
Enders Wealth Management
37800 Van Dyke Ave, Suite 125
Sterling Heights MI 48312
#kimenderscfp
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