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The Importance of Financial Organization

The Importance of Financial Organization

July 30, 2021

Organization is a key factor for many aspects of one’s life. People like to have their house organized to allow for efficiency in daily tasks and organizing your finances may give one the same satisfaction.  A common trend that we find when helping families manage their finances, is that as their household net worth grows, so does complexity.  We find that with other obligations in life, busy people tend to put themselves last on their list of things to take care of.  For example, investment accounts may become scattered amongst different custodians and crucial estate documents may have been misplaced.  This is not the mark of poor financial management but increasing complexity that requires more time and attention.    

It can be overwhelming to keep track of all your accounts, like it is overwhelming to work when your desk is messy.

Tips For Organization:

  • Use one bank for your checking/savings, CD, line of credit, etc.
    • Utilizing one bank will allow you to see all your cash assets in one place. This may allow for easier transfer between accounts, especially with the advances in mobile banking. Some banks also offer loyalty perks when an account holder has multiple accounts or money above a defined threshold.
  • Combine non-retirement accounts into one account.
    • A common issue we see is clients neglecting to deposit physical stock certificates. If the certificate is not stored properly, you are at risk for theft, destruction due to a house fire or flood, or simply misplacement. If stock certificates are sent into a broker-dealer, they will retain the certificate for safekeeping and the shares are deposited like a check into your account.
  • Ask your financial professional if you are eligible for a rollover:
    • Leave the money in his/her former employer’s plan, if permitted
    • Roll over the assets to his/her new employer’s plan, if one is available and rollovers are permitted
    • Roll over to an IRA
    • Cash out the account value
    • If you have a retirement account with a former employer, you may be able to roll it over to your IRA. We have met with multiple clients who have various retirement accounts held with different custodians.. When the accounts are scattered, it can be difficult to align the funds with your investment objective and risk tolerance. For example, if Mr. Client opened a 401(k) at ABC Company when he was 25 and left the company when he was 35 to work for XYZ Company, he would have two 401(k) accounts with different holdings and fees. Now that Mr. Client is 60, he forgot about his 401(k) with ABC Company which has aggressive holdings and is sitting unmanaged. When accounts are rolled over to one account, it can be properly managed, it may offer a lower fee, and will not be forgotten about.
  • Ensure that the titling and beneficiaries on your accounts coincide with the instructions of your estate planning lawyer.
    • Sometimes a client will work with an estate planning lawyer to create a will and/or trust but forget to change the titling or beneficiaries or their accounts. If the client passes away before making the proper changes, they may be faced with unintended estate fees or improper distribution of assets. Completing the necessary changes to your accounts will allow for the terms of the estate plan to be followed as directed.
  • Scan important documents and statements onto your computer and place them in one folder with sub-folders
    • Be sure to have a password-protected device and use two factor authentication when available. Two factor authentication will send an email, text message, or phone call to ensure the correct person is accessing documents or accounts.
    • A digital password manager will allow organization and protection of your passwords. We get it, it is easy to have one password for everything, like your dog’s name or a silly phrase but you are also making it easy for internet scammers to hack into your accounts. Furthermore, if you have your passwords written in a notebook or cell phone, a thief could access your passwords or the items can be destroyed in a house fire, flood, etc. A digital password manager will store all your passwords in an encrypted vault, allowing you to create unique passwords for each online login.
    • Back up your important documents on an external hard drive and store it in a safety deposit box or utilize cloud storage to protect your documents.

Financial organization may be beneficial to you and your family if there were ever a circumstance of death or disability.  Quite commonly, we find wills and trusts being put into action more so from disability than death.  It is important to think of these documents as advocacy maps that spell out who will work to support our health and finances in the event we are unable to do so ourselves.

If need help finding a place to begin, contact us today!


Thrivepoint Financial and LPL Financial do not provide legal advice or services. Please consult your legal advisor regarding your specific situation.

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