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Family offices aside, RIA firms and hybrid practices generally don’t pay bills or perform other everyday money-related tasks for clients who find those chores increasingly burdensome as they age. The reason most financial advisors don’t get involved in this aspect of personal finance is simple: paying bills and filling out forms is time-consuming and not especially lucrative, per se.
But maybe it’s time for advisors to rethink the service. Whether done in-house or outsourced to specialists, bill paying can offer several upsides. Three came to mind during a recent discussion I had with Sharon Zissman, president of the American Association of Daily Money Managers (AADMM, or “Adam”), a group representing more than 600 professionals who specialize in helping people and businesses with everyday money management. An attorney, Zissman is also the director of business development and client relations at Everyday Money Management, a firm based in Rockville, Md., with 22 money managers.
Upside #1: Cementing ties to clients’ adult children and spouses
Advisors continually lament how seldom the adult children of long-time clients opt to stay with them once parents have passed away. Equally disappointing to advisors is how frequently a long-time client’s wife will bolt the practice after her husband dies. Offering a bill-paying and money management service to the adult children of older clients—or to clients who have older parents—and to widows may not be a magic client-retention tool, but it is a practical and much-appreciated way to develop closer ties to the next generation of wealth and to widows.
Zissman says that about half of her firm’s clients come directly and half as referrals from a child or a professional such as a financial advisor, accountant or estate attorney.
“Among those who come directly, it’s hard to know whether they made the decision themselves or were encouraged by their children—some of whom don’t live near their parent or parents and would handle it themselves if they lived closer. Often, the reason for seeking out a daily money manager is the early onset of dementia or some physical impairment, such as Parkinson’s, which prevents a senior from doing the bill-paying themselves. Sometimes, it’s because the spouse who handled a couple’s finances passes away and the surviving spouse is overwhelmed because he or she never handled the finances before,” Zissman said.
Since a trusted daily money manager typically visits an elderly client on a regular basis, oftentimes weekly, Zissman says that a manager’s reports back to adult children may constitute the only consistent and reliable updates the children receive about their parents’ mental and physical condition. A manager’s regular contact and oversight of the client’s checkbook and credit card charges help prevent and detect scams and financial fraud, and eliminate needless spending (such as extra cell phones or cable services), late fees, and delinquencies.
Importantly, daily managers keep track of the blizzard of medical paperwork that accompanies getting older, such as Medicare statements, doctor appointments, and pharmacy bills. They also handle sensitive money-related issues that family members and financial advisors may not want to touch, such as making sure estate documents get created, drawing up a power of attorney, selling a car that is no longer used, and pre-arranging a funeral.
Upside #2: Niche market opportunities
Advisors often talk about providing family-office-like services. But most people, aside from the uber-wealthy, don’t need advisors who evaluate rare art or book exotic foreign vacations. They need more practical help. Providing such assistance to market niches can help an advisor stand out from the crowd. Small business owners, solo entrepreneurs, professionals, and HENRYs (higher earners, not rich yet) are niches that advisors often seek out and likely to find a bill-paying/money management service attractive. So why not become a “family office lite” by offering bill-paying?
“While 80% of our firm’s clients are older, about 20% are busy professionals,” Zissman said. “They just would rather not pay their bills. They want somebody else to do it. They have multiple homes, multiple cars, and maybe some grown children they’re helping to support. They have a lot going on, and they just want to be able to call somebody else and say, ‘take care of this.’ For example, one of my high-net-worth clients called me one morning at 6:30 to say his debit card was declined. Sure enough, when I logged on, I saw an alert on his card because of two charges. I texted him back, we determined the charges were legitimate, and we straightened it out with the bank.”
Zissman said that her association’s members serve many niches, including veterans, small businesses, divorcees, solo agers, and people going through a variety of life transitions. Most charge an hourly fee, and some offer subscription plans.
Advisors might even hire a money manager themselves to help with client onboarding. They would likely get a better fix on a potential client’s total financial picture if a money manager were able to organize the often piecemeal and messy records that new clients often provide.
“Most daily money managers, if not all, create a whole life list, which contains all a client’s important contacts and financial information,” Zissman said. “That includes insurance information; all of their assets, including bank and investment accounts and how those are titled; their bills and how they are paid—whether monthly, annually or quarterly, and from a checkbook or online; a list of all their income sources; their liabilities; their subscriptions and memberships; and, if they have a safe deposit box, where the box is and who has a key. You can imagine how helpful it is to have all the details about someone’s financial life organized and documented in one place.”
Upside #3: Fulfilling a professional and human obligation
Financial advisors have been evolving from salespeople to professionals over decades, and the hallmark of true professionalism is putting a client’s interest above their own. Despite vested interests that prefer never-ending regulatory fog over the fiduciary question, the investing public clearly prefers a straightforward fiduciary standard for those handling their finances. And they probably hope their advisor takes that responsibility to heart.
Do you view your fiduciary duty as an almost sacred obligation or as a legal hurdle you must clear? If the former is the case, it would seem that when clients are unable to handle day-to-day basic financial chores themselves, suggesting and arranging the use of a daily money manager clearly becomes an advisor’s fiduciary responsibility. But even if it’s not, isn’t making sure that a client or their family gets the help they need the ethical and moral thing to do?
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