Expert: It’s time to name your family’s chief financial officer
Jill Hitchcock is the senior executive vice president responsible for the U.S. private client group at Fisher Investments, a fee-only investment adviser. In this role, Jill leads all aspects of acquisition, service and financial planning for U.S. private clients.
In my house, assigning business titles to our family responsibilities helps with the division of labor, teaches my boys responsibility, and adds some levity to otherwise mundane chores.
My partner and I are co-CEOs. I’ve designated my older son chief technology officer, responsible for the ever-increasing number of linked devices. And my younger son is chief toilet paper distributor, responsible for stocking bathrooms with backup rolls — a job I think is much funnier than he does.
While you may not need formal titles for every chore, some are absolutely necessary to assign out. And with so many people facing financial difficulties due to the coronavirus pandemic, it’s time for your family to name a chief financial officer, or CFO. Almost every company has a CFO or similar person who is in charge of budgeting and finances. The same should be true for your family.
Appoint your CFO
For some families, the choice may be obvious. If you’re already managing your family’s finances, give yourself the formal title of CFO — make it official and let your family know.
For others, this process may not be so clear. You may have to draw straws or divvy up financial responsibilities. Maybe you’re the planner who enjoys drawing up a budget and monitoring expenses, while your partner handles the investing. You can be co-CFOs! However you slice it, make sure each person is comfortable with their role in the broader financial picture.
Start by setting your goals
If you aren’t sure where to start, taking inventory and setting goals is a good first step. Do you have a good handle on your ongoing expenses? Do you know how much you’re saving every year and how your investments are performing? Many people don’t, and it’s okay to admit that. Don’t waste time looking back— set your sights on the future and start thinking about your financial goals.
Start jotting down the big milestones you’d like to achieve. Consider things like when you hope to retire, whether you plan to pay for your kids’ college tuition, or first homes and what travel dreams you have.
Keep non-CFOs accountable too!
While the CFO’s responsibilities may be clear, it’s just as important that the non-CFO partner understands their accountabilities. Regardless of role, neither of you are off the hook when it comes to understanding your family’s financial situation and long-term goals. You and your partner should be fully transparent — in good times and bad.
I recommend regular check-ins. Quarterly is best, but you should do a full review of your finances at least annually. If this sounds about as appealing as a root canal, try pairing your check-in with something positive. Meet over a nice bottle of wine (my personal favorite!) or take yourselves out on a “business” date night.
If something dramatic happens, like the stock market sinking as it did in March, you may want to call an “emergency” meeting to tell your partner what happened, what that means for your family, and what you plan to do. It could be as easy as: “The stocks in our retirement accounts are down, but we’re long-term investors and I think the best course of action is to stay invested for the eventual stock market rebound.”
I’ve also seen far too many examples in my career where someone becomes ill or incapacitated, forcing their non-CFO spouse to immediately assume that role without a clue where their money is or even how much they have. It happened to me — my husband passed away in 2014 and thankfully I was fully up to speed with our finances, even though I hadn’t been responsible for managing the day-to-day.
In the midst of a crisis, the last thing you want to worry about is whether the bills are set to auto-pay. So, even if you aren’t CFO, you’re still accountable for knowing the fundamental information about your family’s finances — such as what accounts you have, what the login passwords are, and how to reach your financial advisers.
Don’t be afraid to outsource
As CFO, you may not be an expert in every area of finance. In the corporate world, good CFOs often outsource or hire consultants to help with the areas they’re less familiar with. There’s no reason you can’t do the same. If you’re great at budgeting, but investing isn’t your strong suit, don’t be afraid to hire someone to manage your investments.
If you do outsource, introduce your non-CFO partner to your advisers before something goes wrong. That way your partner can put faces to names and feel more comfortable reaching out in case of emergency. It could make a world of difference when they need it most.
In this time of immense uncertainty, formally appointing your family’s CFO can add a little more certainty to your financial lives — all while allowing your chief toilet paper distributor to keep the shelves stocked.
Read more information and tips in our Family section