What to Do If a Loved One Dies, And You’ve Never Handled the Money

Table of Contents

• Introduction
• About the Podcast and Firm
  • Purpose of the Podcast
  • Origin of the Name
  • About Yardley Wealth Management
  • Mission of YWM
  • Fiduciary Status
  • Compensation Structure
  • Number of Employees
  • Yardley Estate Planning
• Hypothetical Situation
• Discussion on Dealing with the Situation
  • Mike’s Experience with Similar Situations
  • How to Avoid or Lessen the Impact
  • What Should Margaret Do Now?
  • Advice for Couples to Avoid Similar Situations
• Conclusion

Introduction

Madison: Hello, everyone, and welcome to the first episode of Not Just Numbers, Honest Conversations with a Financial Advisor and Lawyer. I’m Madison Demora, and I’m here with Mike Garry, the financial advisor and lawyer.

Mike: Hi, Maddie.

Madison: Hey. How are you doing?

Mike: I’m good. How are you?

Madison: I’m good. I’m good. Happy Friday.

Mike: Happy Friday. Are you ready for this after all this?

Madison: Yes. Yes. I’m ready to tackle this.

Mike: So, for listeners, Maddie’s been working for about six months behind the scenes to get this straightened out. So it looks like we’re winging it. There’s a lot of work.

Madison: It’s a ton of work, I’ll tell you that. It definitely is. It is. It was fun, though.

Mike: And I think it’ll be worth it.

Madison: Absolutely.

About the Podcast and Firm

Purpose of the Podcast

Madison: Mike is the founder and CEO of Yardley Wealth Management, a firm he founded in 2006. We are located right outside of Philadelphia in Yardley, which is in Bucks County, Pennsylvania. So, Mike, do you want to explain the purpose of this podcast and what you’re hoping to do with it?

Mike: We are really hoping to help people, and we want to do that by having honest conversations. You and I, and sometimes with guests, will talk about different things, talk about best practices, some financial rules and regulations, and we’ll even talk about things that we see in the media that sometimes I don’t think are right or are done without the proper context. There’s a Wall Street Journal podcast from recently that we’re going to dive into in episode two or three that I’m really looking forward to talking about.

Madison: Yes, me too. Me too.

Origin of the Name

Madison: So where did the name Not Just Numbers, Honest Conversations with a Financial Advisor and Lawyer come from?

Mike: Well, this is an old story about my oldest, who’s an artist. She’s a really good painter. One time when she was a teenager, she said to me, “Your job must be so boring just dealing with numbers all the time.” And I explained to her why I need to know some numbers. But really, diving into numbers is about 3% of my job. And mostly what I do is know what the rules are and the regulations.

And so, for clients, my job is to provide context so that they can make the right decisions for themselves and their families. And so I need to know numbers, but that’s just a small part of the overall conversation with a financial advisor. And so you know how hard it is to try to find a title that’s not already taken by somebody; then Not Just Numbers kind of resonated. For some reason, I remembered that story recently, and then I threw in “and lawyer,” because, you know what? Estate planning is a big part of it. I am a lawyer. I paid all that money to go to law school all those years ago, passed the bar back in ’96, and I’ve been maintaining my continuing education credits and paying to keep my licenses, so we might as well use it.

About Yardley Wealth Management

Madison: So what is Yardley Wealth Management?

Mike: Yardley Wealth Management is an independent, registered investment advisory firm. It’s wholly owned by me and my wife, Rachel. And we’ll talk about Rachel in some of these podcasts, I think. And it’s registered by the SEC because we manage more than $100 million of our clients’ money for them. And as registered investment advisor, we are independent, so it’s just owned by me and my wife. We don’t work for a bank, a brokerage firm, or an insurance company, as most advisors do.

Even most independent advisors, when they say independent, it means they don’t work at one of the big Wall Street banks, like Merrill Lynch or Morgan Stanley. It means they work for an independent broker, which is like Raymond James or LPL or Edward Jones. It’s still not entirely independent. It’s not the same as the Wall Street places, but it’s still not totally independent.

Madison: And that’s not YWM.

Mike: We are totally independent.

Mission of YWM

Madison: Awesome. So what’s the mission of YWM?

Mike: The mission of Yardley Wealth Management is to provide peace of mind and security by providing leading-edge wealth management and education. So we really try to help people learn, and we try to do our best for our clients to make sure that they have peace of mind, knowing that they’re doing the right things with their money and everything related to their finances.

Fiduciary Status

Madison: So are you a fiduciary?

Mike: I am a fiduciary. Yardley Wealth Management is a fiduciary firm, and we’re fiduciaries all the time. You know, that’s the so-called “f” word, fiduciary. It’s become more popular in the last few years, and just now, the last three to five years, clients have started to look for a fiduciary advisor. And I think it’s important. A lot of people don’t know it’s a thing, and only maybe 5% of advisors are fiduciaries all the time.

And what does that mean to be a fiduciary? It means you need to put your clients’ interests first and act with loyalty and good faith to them. And so that seems to be the right standard for an advisor, right? It’s hard to believe that, like, 95% of advisors don’t have to follow that standard.

One funny, quirky thing is that for a lot of independent advisors, they act as fiduciaries sometimes. So if they manage a so-called “wrap account” or they get a manager for a separately managed account for you, for that account, they need to act as a fiduciary because they’re managing money or paying someone to manage money for you; you’re actually paying for it.

Anyway, in most situations, though, they don’t have to act as a fiduciary. So that is a bonkers regulatory scheme, right? You have to act with good faith and loyalty to your client sometimes? What the heck does that mean? How do you do it sometimes? You put on your fiduciary hat and say, “Okay, well, this is the right allocation for this account,” and then take off the fiduciary hat and sell, like, a structured product or a non-traded REIT and make a giant commission.

I think for people who are looking for an advisor, they need to look for someone who is a fiduciary to them all the time. There’s thousands of us out there. There’s no reason to hire someone who’s not going to put your interest first. And don’t just say, “Oh, well, my guy’s a nice guy. He’s okay. He doesn’t have to put my interest first. I’m sure he does.” Maybe he does. But that’s the thing with conflicts of interest. You know, the person making the decisions doesn’t necessarily know or realize all the time how conflicted their interests are, right?

It’s just like Congress. Everybody hates Congress but then keeps re-electing their own congressperson. Well, maybe advisory is the same thing. You know, like, I think you owe it to yourself to have someone who always acts in good faith and loyalty and puts your interests first. If that’s an option, why not take it? Sorry for that rant, Maddie. It’s one of those things that will get me talking and talking.

Madison: Yes, yes. How do people know who’s a fiduciary? Like, I know you can advertise as one, but is there any other way people could know?

Mike: Yeah, so, I mean, ask your advisor and ask them to put in writing that they will act as a fiduciary and that they always will. Another way of looking without asking your advisor is if on their website they have disclaimers for a brokerage company, then they’re not acting as a fiduciary. So if it says “Securities offered by Raymond James or LPL” or something in the fine print on their website, then they will not be able to act as a fiduciary.

Compensation Structure

Madison: Okay. So how are you compensated for your services?

Mike: Sure. We charge clients a percentage based on the amount of the money that we manage for them. And that’s one and a quarter percent on the first million dollars, and then it gets cheaper above that. It’s 1% from one to two and a half, eight-tenths of a percent from two and a half to five, and six-tenths of a percent above $5 million. And we do that quarterly and in arrears.

So the value of somebody’s account on March 31, we do the billing a few days into the next quarter, and the account gets debited for the fee. And we don’t make any commissions for anything. So we really do just get paid based on the value of the account. So the value of the account goes up, we make more money; the value of the account goes down, we make less money. But it doesn’t matter what we put in the account. We’re not going to get paid differently for that.

And that’s a big difference. That’s where the conflict of interest lies. If you go to somebody who is not a fiduciary and they have a choice of selling you something that they’ll get a 1% commission for, a 4% commission for, or a 6% commission for, or for a non-traded REIT, maybe a nine or 10% commission, what do you think they’re going to do? You know, they’re going to choose the 1% option a lot less than they should. And that’s why you need to avoid those conflicts of interest.

Number of Employees

Madison: So how many employees are in YWM?

Mike: So we currently have four full-time employees, and we’re looking to hire another advisor.

Madison: Okay. So the search is on.

Mike: The search is on.

Yardley Estate Planning

Madison: So I want to go back to you going to law school. Tell us about the law firm, Yardley Estate Planning.

Mike: Sure. Yardley Estate Planning is a law firm. I’m licensed in Pennsylvania and New Jersey. We do mostly legal work for our clients of Yardley Wealth Management and for people that we know in the neighborhood, friends and relatives of the people who work here. We used to offer services to the public, but we just don’t have the capacity to do that anymore.

And I started doing that back in—we started the law firm a year after we started Yardley Wealth Management, and that wound up being—Yardley Wealth Management was February 10, 2006; Yardley Estate Planning was May of 2007. When I did that, when I realized, like, three different things came together. I went to lunch with my wife’s cousin’s wife, who’s a lawyer and great lawyer at a great firm in Huntingdon Valley, and had a conversation with a buddy of mine who said, “I don’t know why you don’t practice estate planning, because you can and your clients need it.”

And so we talked about it. I had a different friend look into what the ethical rules, regulations would be and then decided to do it. And it’s helpful. You know, maybe somewhere between 35% and 45% of our clients we’ve done their estate planning for. And it makes it easy for them so that they don’t have to find another person. It’s easier to communicate, like updating beneficiaries and trusts and things like that. So it was good advice from Scott all those years ago. I’m glad I did it.

Madison: Yeah. Thank you, Scott.

Hypothetical Situation

Madison: Okay, so, thanks, Mike. Now, we talked a little bit about your firm. Let’s get into the topic for discussion today. Here’s the hypothetical situation:

Margaret is a 50-year-old woman who hasn’t worked outside of the home for many years. Her husband Paul had a high-paying job that allowed Margaret to stay at home and raise their two children, one of whom is still in college. Paul also took care of the family’s finances, everything from paying bills monthly to managing the couple’s assets and retirement planning. Last month, Paul had an unexpected heart attack and passed away suddenly. Margaret knows she has assets but doesn’t even know what or where they are, let alone how to manage them.

Have you ever come across a situation like this?

Discussion on Dealing with the Situation

Mike’s Experience with Similar Situations

Mike: Unfortunately, we have. It’s not that uncommon for someone to die early or young. And in most situations, it’s one person that manages the couple’s money. I’d say overwhelmingly it’s 90% of partners or spouses; one person does almost everything. Occasionally, bill paying and investments are split up, but usually one person does everything.

And a lot of times the spouse who doesn’t do it, or the partner who doesn’t do it, has really no involvement in it. Yes, it makes it really, really hard for the survivor. And now it’s even worse than it would have been 10 or 15 years ago because so many accounts are online. And so 20 years ago, when somebody passed, eventually all the account statements would come in the mail, and then the survivor would say, “Oh, I have this IRA I didn’t know about.”

But now the survivor, Margaret, would have to make sure that in addition to keeping an eye on the mail, she’d have to be able to get into Paul’s email and see what email comes in. And hopefully he’s got files organized by either account type or by the place where they are, like all their Schwab statements together or what have you. Yeah, it’s a hard situation.

How to Avoid or Lessen the Impact

Madison: Yeah. So how can a situation like this be avoided or at least be less tragic?

Mike: Yeah. So, unfortunately, it can’t be avoided that someone would die young. But I really do try to stress to people to have both spouses at least minimally involved. Even if one person does all the day-to-day bill pay and investment management and insurance and everything else, that person really does need to make sure that they include the spouse who doesn’t do any of that sort.

And it’s common. We split duties in our house. Rachel takes care of the girls. I don’t have 800 texts a day from them. It’s a different relationship. We do different things. But a couple of years ago, Rachel and I decided to start doing this together. And so she’ll grab a glass of wine, and I’ll grab a beer, and we’ll go through the monthly bills and do them all together. And I have to say, it has been a good thing because it’s hard. It’s time-consuming. The first couple of times, it took hours. Now it probably takes 45 minutes or so.

But we go through all the account statements together. We look at all the spending together. We’re on board with everything together. We’re a team. And I actually think it’s helped. We see what spending is, the ebbs and flows, some things that we might regret after doing it. And I think it’s a good thing.

And if something happened to me, you know, I think she’d still have a hard time with a lot of the bills and stuff like that, but she’d have a good place to start, and she would be able—she would know where to find the passwords. She would know which bills get paid when and where she writes them in the checking account or the checkbook. So she does literally see them. And so it would still be hard.

But, you know, we also have a relationship with a CPA, which a lot of people don’t necessarily have. And as part of our contingency plan for the firm, if something happens to me, another advisor nearby buys the firm from Rachel, or if something happens to both of us, buys it from both of us. And so, assuming I go before her and too young, she’d have an advisor in place already that she knows and has had dinner with a couple of times. A CPA in place that’s done our taxes for a long time now, and she’s done the bills. So she would be a lot more prepared than she would have been five or ten years ago.

But that’s only really because we took those active steps, because at one point, something happened with somebody else, and I realized that that was a big weakness that we had. I wanted to take the steps to fix it. Sorry for that big, rambling answer, but.

What Should Margaret Do Now?

Madison: Yeah, absolutely. It’s always good to be prepared. I know no one likes to think about it, but, I mean, you never know when things are going to happen or things are going to come up. So we talked about how to avoid it for it to be at least a little less tragic. But what should Margaret do? I mean, obviously, it’s too late for her. So what should she do?

Mike: Yeah. So she has, like, a disaster plan now. So the first thing she needs to do is see if she has any kind of income or any kind of assets to create an income stream for her. And so if Paul hadn’t used a CPA or a financial advisor, she probably should need to hire both. She needs to call Paul’s place of employment to see if he has benefits, life insurance hopefully, and whatever accounts he has or any other employee benefits that he might have.

And I think that she really—I know it sounds self-serving as a financial advisor, but I think a financial advisor would help because she needs to come up with some sort of a balance sheet and a proposed income statement to see if she can at least temporarily maintain her current situation, or does she need to move her kids into a smaller house or an apartment or something?

And so hiring a financial advisor, the advisor will be able to give her some grounding to listen to her, let her speak about what’s going on, and help come up with a game plan. A lot of this stuff is hard enough even if you do it. And if you don’t do it and you’re dealing with it while raising children and grieving a spouse, it would just really be a hard situation. And so I think it would be a great idea for her to find a financial advisor and a CPA.

Advice for Couples to Avoid Similar Situations

Madison: Okay. So I know we kind of talked about it already. So what else could couples do to avoid this situation?

Mike: Yeah, I think the big thing is really to have open conversation and a plan. Even if you don’t have an advisor—you don’t need an advisor to have a plan. You know, if, as you’re working through things, you and your spouse or partner have a plan where you’re going to set aside a certain amount each month in your retirement accounts at work, a certain amount in savings, pay down certain debts, make certain investments, have certain insurance.

If you know all of that stuff and have contingency plans, say, like, “Hey, Paul should have ten times his income in life insurance.” And then between that and the amount of assets that they built, you know, in the previous 20 years or 25 years, there’s a good chance she would have enough to live on. And so, yeah, I think it really takes, like, come up with a plan, update it every year or so so everybody knows what’s going on, and then roll with it. And it will be difficult. It’s a hard situation. Life can be hard sometimes.

Conclusion

Madison: Yes. So for more information on YWM, you can visit our website, yardleywealth.net. You can also follow us on socials at Yardley Wealth Management. This podcast has been produced by myself, Madison Demora, and Mike Garry, with technical and artistic help from Poe Productions.