Don’t wait for death or divorce…Knowing how to handle your finances is a necessity

Don’t leave your spouse or partner to manage your family finances. Whatever your role, stay home parent or CFO of a top 200 company you need to have some control over your family finances.

Despite the fact that women hold more than half of the country’s private wealth and make the majority of a household’s purchasing decisions, they tend to push financial decisions to the side, often relying on a spouse or a parent to handle them.

My drive to encourage women to have some control comes from client and personal experiences. When I first met one client she was under a great deal of stress because she had just found out that her husband was having an affair and was about to go through a separation. Her only request was “are you able to help me work out what we have?” She had no idea of their financial position – not an uncommon scenario. She was married to a wealthy executive and had been the parent at home raising her 3 daughters for the past 16 years. From the time her children were born, she let go of any control over the family finances leaving it to her husband to take care of. The extent of her involvement was to sign the documents her husband placed in front of her from time to time. She was content just having access to cash when she needed and credit cards that were paid off by her husband. When he offered a lump sum of cash as a settlement that didn’t really tally even close to the value of some of the assets, she knew that she needed help.

The good news was that she recognised that she needed help. We were able to piece together the family’s financial position that resulted in her settlement being 3 times that offered to her initially by her husband.

A more recent experience involved the death of one my elderly male clients. I had always dealt with him and despite many requests for the wife to join us for meetings it was always “that’s his area, I don’t need to know”.  When the client unexpectedly passed away, the first call with the wife involved a very distressed discussion around “what do I do? Can I keep taking cash out? How do I pay the bills”. Even worse in this example was that the client had not documented many things and had most of their personal information in his head, including the location of his will. While we were able to work with the client to sort out the various concerns, it took unnecessary stress and time.

I also grew up in a household where my mother was the stay home parent while my father handled all the finances. My mother didn’t have access to any of their accounts or credit cards. She relied on a weekly allowance from my father to cover the household costs. When they divorced after 15 years of marriage, my mother walked away with 3 children and no assets. My father had no assets in his name at the time, as he had managed to transfer them to his siblings to manage.

Don’t think it won’t be you. Research shows that 9 out of 10 women will be solely responsible for finances at some point in their lives.

Some simple tips you can follow:

  • Get involved in managing the family’s finances. Understand what is going on with the investments and debt. Review all bank and investment statements monthly. Know where your money is. Keep organised records.
  • Have your own bank account and credit cards. If not at least make sure all the cash and savings accounts are in joint names.
  • Make sure your home is in joint names. This is a must to ensure that the home transfers to you automatically on death.
  • Make sure you have a copy of both wills. It’s important to understand how the assets will flow on death.

Fortunately events like this break down the barriers and encourage women to take the helm. A key part of getting on top of one’s finances, is considering how to handle both immediate, and future, finance.

Family Office advice leads to $150M in New Funds Under Management

Prosperity’s Family Office has added another $150M to their fast growing pool of funds under management with the addition of a further three high net wealth investor families.

The clients will be tapping into a range of the specialist Family Office services provided by the firm.

“It is a continued affirmation that the Family Office offering is providing the valuable and investment and advisory services that ultra high net wealth families are seeking in this still quite challenging investment climate,” said John Manuel, a Director of Family Office Services, for Prosperity Advisers.

Prosperity has deepened the resourcing of its Family Office Services over the last 12 months to support the needs of their steadily growing, ultra high net wealth clientele. We found that clients in this category were receiving a constant stream of investment proposals from an array of sources. A trusted adviser to sift through these opportunities and shortlist those that best match their investment profile is invaluable.

In a recent example of the benefits for Family Office assistance we were able to negotiate an improvement in term deposit rates of 30 basis points, over the client’s best efforts, increasing the returns on the client’s cash portfolio significantly.

“We have found our very wealthy clients needed more than just classic financial planning or wealth management. We found they needed a very deliberate, consultative approach to both their active and passive investments, guiding, overseeing, reporting, managing transactions, and vetting investment opportunities on their behalf as well as optimising the tax outcomes. In the last year we have deepened our resourcing of Family Office services to respond to this need,” said Allan McKeown, CEO of Prosperity Advisers.

The cornerstone of the Prosperity Family Office includes:

  1. Investment:  Properly structured, carefully protected and diligently managed investment portfolios that assemble the right asset mix for the family or individual’s profile, and manages transactions on their behalf.
  2. Guidance:  Ensuring responsibility, accountability and risk management are all taken seriously by reviewing the investment opportunities clamouring for attention as acting as an independent panel of advice for the family.
  3. People:  Active mentoring of family members, making sure family dynamics don’t get in the way of smart wealth management.
  4. Education:  Taking less experienced family members on a journey that educates them about wealth, investment and risk, supporting them on their way to independence.

For more information on Prosperity’s Family Office please visit http://www.prosperityadvisers.com.au