It is important that you, as a couple, understand the state of your finances and have a documented plan for where your income streams are going to be coming from.
Question: I have always managed the family finances. I am concerned that when I die my spouse could receive the wrong financial advice and run out of money. What should we do now to prevent this from happening?
Answer: This is a very real danger. Over the past year I have come across two structures where a person would have run out of money within 10 years because of poor advice after the death of a spouse.
It is important that you, as a couple, understand the state of your finances and have a documented plan for where your income streams are going to be coming from. I would recommend that you do the following:
1. Document your finances
Make a list of all your investments with the current values. Also list the various income streams that you have. Share these with your spouse so that he or she knows what you have and what you are living on.
2. Appoint a financial planner
Find a financial planner who is knowledgeable and with whom you and your spouse feel comfortable. Ask your friends for recommendations. You can also find a certified financial planner on the Financial Planning Institute’s website.
A certified financial planner has to abide by a code of ethics and demonstrate competence by achieving a much higher level of continuing professional development hours than a regular financial planner needs.
Once you have a shortlist of financial planners, ask them for references of people they have advised – ideally from a client who has lost a spouse.
It is important that this selection process is thorough, because you will be entrusting your future finances to them.
You need to find someone who is competent, caring and ethical.
3. Have a detailed financial plan drawn up
Once you have appointed a financial planner, get a financial plan drawn up. This would look at all the investments and income streams that you have. It would indicate the level of return that would be needed for your income to be sustainable for the rest of your life and your spouse’s life.
This plan should be reviewed each year to check that the returns needed for the plan to be successful have indeed been achieved.
4. Set up a family meeting
If you feel comfortable doing this, call a family meeting at which your financial planner goes through your financial arrangements.
I often hold these family meetings via Zoom or Microsoft Teams, as many children live overseas.
The advantage of doing this is that the children understand their parents’ financial setup and feel comfortable with the quality of advice that they are getting.
Financial planning is very important and especially needed as you get older, when the consequences of making a mistake can be significant. It is therefore advisable that you invest some time in partnering with someone who can help you make the best decisions going forward.
Article by Kenny Meiring – Financial Wellness Coach