As a financial organizer / daily money manager, I keep both the big picture and the details in focus at all times. It’s a balancing act that’s essential to doing the job well.
In a typical month-end client visit, I and my client open and review the bank statement.
Using this as a jumping-off point, here’s how I zoom in to the details and then step back to share the big picture with my senior clients.
Important note: I encourage my clients NOT to go paperless with their bank, because we need hardcopy bank statements for our monthly review.
Zoom In
First, we look closely at the details: Do the expected income items appear? Did all the auto-pay bills get debited—the appropriate number of times, and within the expected dollar range? (So that nothing falls between the cracks, I find it best to check direct debits against a spreadsheet that I create for each client.) Are any items missing (= missed payments) or ones there that should not be (potential fraud)? This is also a good time to highlight the items that will be potential tax deductions, like real estate taxes and medical expenses.
We then turn to the check images to make sure each one looks legitimate. Best to get images of both front and back of each check with the statement. (Months before the 2014 Russian hacking of Chase became public, a colleague detected problems with his client’s Chase checking account when he noticed check images that just didn’t look right.) While it seems like we’ve focused on the small details, when something is amiss, this is often where we find it – and that’s a big deal!
Zoom Out
Next, it’s time to zoom out to the bigger financial picture. For clients who work alongside me, this provides a teaching opportunity. I show them the inflows and outflows of funds in their account--pointing out income items (“Here’s your Social Security”) and expenses (“Here’s your payment to Con Ed, Verizon, etc.”). Any questions or problems? We dig further and, if need be, call the bank or vendors with our questions.
Income versus Expenses
Finally, we zoom out even further. Did more money come in than go out of the account--or maybe it was the other way around? How does this difference between income and expenses compare to a typical month? What are the trends--is everything on track or does the client need to make some adjustments?
Is it time to consider cutting expenses? Do funds need to be transferred from other accounts to cover potential shortfalls in the future? Maybe some of these questions involve other advisors. Would it make sense to include the financial advisor, accountant, or trust and estates attorney in the conversation, to get their perspectives and answers to specific questions? Perhaps the conversation will extend to another visit or follow-up phone call.
Finishing Up the Visit
Back again to the details --
To wrap up the visit, I staple and file the bank statement — a small but essential detail that’s part of my job as financial organizer!
Photo credit: ID 107320014 © Viktor Kanunnikov | Dreamstime.com