Tag Archives: wealth management

The (Big) value of a Comprehensive Financial Plan

The slides that follow are from the Financial Planning Standards Council (Canada) of which I’ve been a proud member since 1999. The slides summarize a 3 year longitudinal study the FPSC developed to measure the impact a financial plan has on Canadians’ emotional and financial well-being and the impact of working with a CFP professional.

The impact of both are significant

Take a look and move forward with a financial plan

Estate Mistakes from 4 stars that died too young

Estate planning is for everyone – avoid Estate Mistakes

The goal of estate planning is to leave what you have to whom you want to.at the least possible cost in terms of administration and taxes. But, no one can successfully predict how long they will live; illness and accidents can happen at any age & when least expected. That’s why estate planning is important no matter the age (or stage). Too many families are caught off-guard and found unprepared when an incapacity or death happens and proper estate plans are not in place.

Estate planning is also not just for the wealthy; it’s important that proper estate planning & instructions be discussed and documented no matter the state of wealth. Indeed, estate planning can often mean more to families with modest wealth, because they can afford to lose the least.

I think there are profound lessons worth passing along from the estates of 4 very famous young stars who did not leave complete estate plans in place. Hopefully, others young or old, rich or not so rich can learn from these mistakes.

Phillip Seymour Hoffman (1967 – 2014)

A much-loved, versatile & celebrated actor, director, and producer of film and theater who won a best actor Oscar for his role in “Capote” in 2006. He died of combined drug intoxication. He was 47 years young.

Estate Mistakes:

  • His entire estate was left to his partner who was the mother of his 3 children,but he failed to create trusts for his children.
  • Because his partner was not his wife, the estate did not transfer on a tax-free basis.
  • By not setting up a revocable trust, his estate was subject to probate which caused further delays and costs and made his family financial situation, very public.
  • Estimated cost of estate mistake: $15 Million of an estimated $35 Million estate

Amy Winehouse (1983 – 2011)

The controversial yet undeniably talented British singer and songwriter known for her deep vocals and eclectic musical taste, died of accidental alcohol poisoning . She was 27 years young.

Estate Mistakes

  • She died “intestate” meaning that she did not leave a valid will.
  • Her estate passed by law to her “natural heirs” being her divorced parents. Her ex-husband who she remained very close to until her death; received nothing.
  • Her father was appointed as administrator and incurred considerable personal and financial burden in settling Amy’s complicated estate which included 6 music companies. The resulting cost to settle bills, debts and taxes ate up the majority of the estate estimated at $7 Million.

Heath Ledger (1979 – 2008)

The brilliant Australian actor and director died of accidental overdose of prescription drugs. He had just finished filming his performance as the Joker in The Dark Knight for which he won many awards after his death including an Academy award. He was 28 years young.

Estate Mistakes:

  • He did not update his will following the birth of his daughter, Matilda
  • The beneficiaries in his will were his parents & 3 sisters with no mention of his daughter or his daughter’s mother
  • A filing of probate by his daughter’s guardians in Australia sought part of the estate held in Australian trusts worth approximately $20 Million. Much publicity around family infighting ensued until Leger’s father agreed to financially support his granddaughter

Paul Walker (1973 – 2013)

This young “heart throb” was best known as the star of the Fast & Furious movies and tragically (and ironically) died in a high-speed car accident that lead to a fiery car crash. He left a 15-year-old daughter and a tangled mess of finances & questions. He was 40 years young.

Estate Mistakes:

  • He established a revocable living trust for his 15-year-old daughter many years earlier, but he was noted as the only trustee with no successor trustee named. This has led to much debate between his own family and the mother of his daughter as to who will oversee the trust given that his daughter is a minor.
  • He had not updated his will in 12 years, a period over which his net worth grew significantly. Given the fact that his will had not been updated, there were no provisions made for his girlfriend of 7 years, who he intended on marrying.
  • While he established a revocable living trust for his daughter it was not funded fully during his lifetime so there has been considerable expense and publicity incurred that could have been avoided. It’s a common mistake to set up a trust but not do the actual transfer
  • Estimated cost of estate mistake: $5 Million of an estimated $25 Million estate

Better and more complete estate planning would have saved the estates of these young stars, millions in estate taxes. Better financial organization would have saved the families additional grief that comes with tracking down details and settling final accounts.

Better financial organization and peace of mind are goals behind LegacyTracker. When better organization is in place; better and more complete planning can take place.

Lost & returned savings bonds make a perfect Christmas story

Lost but found savings bonds

$127,000 in lost & returned savings bonds – make for a pretty perfect Christmas story but…

A (very kind) Massachusetts bargain hunter last month returned  $127,000 in matured U.S. savings bonds he found in a desk that he had paid $40 for. The bonds had been tucked away for safekeeping for many years despite the fact that the owner hadn’t forgotten about the bonds; he had just forgotten what he had done with them. He had searched for the missing bonds for many years even going as far as seeking help from the US Federal Government via their unclaimed bond program. His attempts were unsuccessful and so the recent return of the long-lost bonds makes for a really nice story of kindness this time of year.

 The Christmas angel  is Phil LeClerc, of Weymouth, Mass who deserves a great Christmas after making it a Merry Christmas for another family in Massachusetts.  Mr. LeClerc promptly returned the long-lost savings bonds after finding them quite by accident, to the auction house where he had made the desk purchase.

The lost & returned U.S. savings bonds  in $500, $1,000 and $10,000 denominations — belonged to a 94-year-old man who did not have enough money to pay to live in an assisted living home…but now he does. Those lost & returned savings bonds will be tremendously helpful to his future care.

Read more about the story here 

A happy ending indeed which is a nice boost to our faith in human kindness but sad at the same time and a lesson for others. What if the bonds had not been found & returned? The family had been in the process of liquidating all of the man’s assets in order to help care for him; hence the sale of the now-famous desk. There seems little doubt that the bonds could have been useful for many years. The (anonymous) bond owner had been looking for the bonds for many years and so it seems safe to assume that the emotional and financial drain had taken a toll on him & his family.

No one loses Financial Assets on purpose.

Lessons abound in this story.

It’s important to store vital documents in a safe place and share that information with those you trust. Copies of hard to replace documents are also helpful and would have proved really helpful in this case where the elderly gentlemen knew he had purchased the bonds but had no proof or documentation in order to claim them.

Our goal with LegacyTracker is to prevent exactly this kind of misfortune from happening. LegacyTracker helps families secure & share important information including copies of critical documents with trusted loved ones or advisors.

Canadians are stressed about money

Canadians are stressed out about money

Money stress is the leading source of stress among Canadians

Money stress is causing significantly more stress than work, personal health and relationships according to a Financial Planning Standards Council (FPSC) survey released today.

The findings are being released in conjunction with the 6th annual Financial Planning week (November 16-22) during Financial Literacy Month (November)

The FPSC survey finds that financial stress is driving Canadians to lose sleep, reconsider past financial decisions, argue with partners and lie to family and friends about their personal finances.

Canadians’ experience financial stress to varying degrees depending on age, gender and openness to discussing personal finance issues.

Here are the key findings among respondents across the country (excluding Quebec):

  • A significant number of men and women lose sleep over financial worries (51% of women; 40% of men);
  • 45% of Canadians are embarrassed about their lack of control over finances;
  • Millennials are more likely than any other generation to lie about personal finances; 33% admit to being dishonest with friends, 25% with family and 15% with co-workers (compared with national averages across all age groups of 17%, 14% and 9%, respectively);
  • 87% of Canadians wish they had made better financial decisions earlier in life;
  • Four in 10 people in relationships with shared finances argue regularly over finances; and
  • 1/3 of Canadians believe that, on average, their friends are in better financial shape than they are.

You can learn more of the details here

What’s the answer?

According to Cary List, the President & CEO of the Financial Planning Standards Council, the FPSC wants Canadians to know that engaging in financial planning with a qualified professional can help enhance both their financial and emotional well-being,

“We urge everyone to source  a CFP professional on our Find a Planner tool at www.fpsc.ca and discuss their situation, goals and financial needs.”

The founder & CEO of LegacyTracker is a Certified Financial Planner and a member of the FPSC.  One of the primary considerations for building LegacyTracker was to enable individuals & families to become more empowered with their own financial/estate information enabling them to become more proactive with financial/estate planning.

Get ‘engaged’ with a Certified Financial Planner today. It’s easy with the Find a Planner tool provided by the Financial Planning Standards Council

Perfect storm in the financial services market

A Perfect Storm ?

A Perfect Storm in the financial services marketplace for a personal financial management (PFM) tool 

It certainly feels like a perfect storm is unfolding at the moment that we think provides an opportunity for financial organizations & professionals to provide clients with a personal  financial management tool offering a Win/Win benefits.

The challenges are many:

  • Demographics: Aging/Sandwich Generation/Smaller families
  • Demographics: Increased longevity/Rise in incapacity
  • Increasing need for enhanced financial literacy
  • Increased risk related to Inter-generational wealth transfers ($41 Trillion)
  • Push to ‘paperless’ reporting
  • Increasing Complexity of personal finances/impact on executing estates
  • High levels of personal financial stress impacting productivity in the workplace
  • Increase in the number and impact of natural/physical disasters highlighting the need for emergency preparedness
  • The need to differentiate in the marketplace due to fierce competition
  • Higher expectations from clients to show value for fees
  • An alarming rise in the balance of unclaimed financial assets ($63 Billion)
  • Increased appetite for technology tools particularly from younger generations to manage their financial lives
  • Continued procrastination on the part of individuals & families to have important conversations about estate planning/final wishes

A little organization can make a BIG difference.

LegacyTracker helps clients simplify, safeguard & share their important financial & estate info, documents & to do’s with loved ones and/or advisors.

Better Organized Clients are Better Clients.

LegacyTracker can provide a Win/Win solution for Organizations:

  • Enhanced Loyalty/Retention/Referrals by demonstrating Customer Advocacy
  • Better Differentiation in the market
  • Better Insight into the challenges & needs of clients for products & services
  • Improved engagement/collaboration with clients (“Do More”)
  • Reduced costs related to marketing/on-boarding
  • Increased Revenue/Profit

We think that all leads to Increased Revenue/Profit on your bottom line with happier clients

Get in Touch/Connect for the details

 

Worries of the Wealthy (HNW) in 2014

 

US Trust 2014

The 2014 version of the U.S Trust Annual Insights on Wealth and Worth was recently released. The annual survey provides insight on the wealth management challenges confronting high net worth and ultra high net worth individuals in the US.

High Net worth is defined for the purposes of this survey as being $3 Million or more in investable assets. The 2014 survey sheds light particularly on the growing challenges and needs that come with more complex family dynamics including multi-generational and extended family situations. Worries of the Wealthy.

Some highlights that we found particularly interesting and some of the challenges that LegacyTracker can help with….

The Top 5 risks to family wealth

Divorce, Addictions, Untimely death or disability of a primary income earner, medical problems  and disagreements over inheritance or distribution of family assets

Family circumstances US Trust 2014

“The modern American family is more diverse than it once was, adding to the challenges of wealth management for high-net worth investors and their advisors. Changing family structures and roles among multiple generations of immediate and extended family members affect the way family members interact, communicate  and manage their wealth”

Ranking the most important reasons for having an estate plan

US Trust 2014 Reasons for Estate Planning

How important are Financial Legacies ?

While 60% of those surveyed thought it was important that they leave a financial legacy, 96% of wealthy parents are concerned that their children will be mature enough to receive an inheritance until at least age 25 and 37% think the ideal age is between 30-34. That might explain why only 38% of wealthy parents have fully disclosed their financial status to adult children over age 25.

Executor choices

Perhaps some troubling challenges on the horizon?

  • More than 3/4 of those surveyed have named a family member or friend as executor
  • Most often, individuals name their spouse as an executor but…
  • Nearly a quarter of those surveyed had not yet chosen an executor or trustee
  • 22% have not named a trustee because they have not established a trust

Families and Friends as Executors US Trust 2014

Few consider capacity of executors

Executor challenges

There were many challenges noted by those that have served as an executor or trustee. The 2nd biggest challenge cited was…having access or knowledge relating to where the records and important information was kept.  We would suggest that this issue adds to the biggest challenge noted being, the time commitment of time require to execute a will. Time is money and time can also add to the grief already being experienced in the case of a loved one who has been named as executor which happens a majority of the time even in high net worth families.

 

US Trust 2014 Survey on Executors

Yes. LegacyTracker can help with some of these challenges; important documents & information is critical & so is the sharing of that information as required. Our built in alerts & reminders are all about ensuring that the proper documentation & information is safeguarded.

 

Read the full US Trust Survey US Trust 2014 survey on High Net worth individuals

 

 

US Banking survey

Banks are searching for revenue growth and technology to deliver it

Building revenue is a critical priority for the Banking Industry

The above statement may not perhaps be BIG news in most industries but it is in US Banking. That’s because the emphasis in the US Banking industry is now in high gear after years where the priority (after the financial crisis) was all about managing risk, cutting costs & meeting regulatory requirements.  But now it seems, the focus or refocus is on Revenue Growth in a big way and they are turning to technology to help deliver better relationships with clients & account holders who will help their revenue grow.

The KPMG 2014 Banking Industry Outlook Survey of 100 senior banking executives reports that revenue growth is expected to be delivered by concentrating on relationship building & technology investments that provide better customer experience(s).  

Building better relationships with customers is key to exceeding customer expectations & driving revenue.

  1. Keep customers at the heart of decision-making
  2. Maintain a dedicated focus on understanding customer needs in various customer segments
  3. Deploy an omnichannel approach that offers superior and consistent client experience

The KPMG survey also highlights the areas where most US banks will look for this additional revenue growth. There is a clear eye on wealth management and lending. That means the wealth management sector is going to see competition really heat up.

 

2014 KPMG Banking Survey

Here’s the survey for your reference KPMG_Banking Industry Survey 2014

 

Who`s in charge of your family finances ?

Talking about your family finances makes for a happy marriage

So says a recent survey from Experian Consumer Services about Love & Marriage and Credit Open dialogue about family finances helps avoid conflict and can prevent one spouse feeling that they carry more of a burden over the other. It`s also apparently sexy! 73% of women and 60% of men in the survey said open communication with their spouse or partner about finances makes him/her more attractive.

So…It makes you wonder why on average, only 39% of all married adults are sharing responsibility for their family finances ?

Family Finances

 

Who`s in charge of your household finances

 

LegacyTracker can help you share & communicate information about your family finances. And, since open communication about such matters is key..We think that means that LegacyTracker can help you have a happy marriage.

Inter generational wealth transfers

Preparing for wealth transfers in the trillions – a strategic imperative

It’s a lot to lose

The looming inter generational wealth transfer may receive much attention in the news but how much real preparation is taking place in the financial services market for this transfer? Not reaching out to the spouse, or children & grandchildren (heirs) of existing clients presents a real risk. Bank of America in 2011 noted that assets transferring to a spouse move to another firm 55% of the time while assets transferring to children move as much as 98% of the time.  Bank of America aptly noted the strategic imperative of reducing the risk of inter generational wealth transfers; “a very real risk of long-term erosion to their business

How much ?

Life expectancy, rising health care costs , changing tax legislation and increasing debt levels aside, the estimated value of Inter generational wealth transfers over the next many years is in the Trillions and comes by way of 2 different phases.The so-called “Great Transfer” is an estimated $17 Trillion + that is expected to shift between the “Greatest” generation to Baby boomers. A 2nd shift  (“Greater transfer“) is another $42 Trillion + that is expected to move from Baby Boomers to Generation X.  Added together or alone, these transfers present a high level of risk for financial advisors/firms to lose assets. An estimated $30 Trillion of this total of $59 Trillion is expected to shift in the next 30 years.  During the peak of the wealth transfers taking place (between 2031 to 2045) it’s estimated that 10% of the Country’s wealth will change hands every 5 years.

Where’s the risk?

Estimates vary based a lot on wealth and income but most studies indicate that too few families (less than 35%) have discussed estate planning with their primary financial advisor. Why don’t more families take the time to discuss and prepare? Certainly, the myth of estate planning only being for the wealthy continues to prevail but so does procrastination and the ‘discomfort” of the topic generally.

At the same time, why are financial advisors not more actively engaging with clients & their heirs about estate planning matters? Some evidence suggests that most advisors happen to be Baby boomers themselves and feel that they lack effective ways to both reach out to the children & grandchildren of their clients and engage proactively with clients to establish multi generational wealth transfer plans. That’s not good (!) Estate planning discussions provide great value to clients, their families and financial advisors.

Engage/Do Good/Enhance Value/Retain

Research shows that at least 60% of inter generational wealth loss is caused by poor communication and a lack of trust within the family. Encouraging clients to talk with their family members about their expectations and values before the estate planning process begins is a meaningful way to provide value. We’ve written about the idea of Ethical wills over and above traditional will planning in other posts on this blog. (We provide a place for both in LegacyTracker)

Coordinating family meetings provides a great way for advisors to introduce themselves to the next generation and show that they care. Clients appreciate an advisor that cares and demonstrates customer advocacy on a regular basis & so will the families of those clients.   By offering a technology solution that helps clients simplify, safeguard and share their important financial, legal and estate information, financial advisors and firms can demonstrate customer advocacy to the entire family. Being organized will make a real difference for an entire family in enhancing their level of emergency preparedness.  Our branded solution can ease the potential burden on a family should an emergency arise; reducing the risk of additional grief, delay or cost that often comes when families are unprepared.

LegacyTracker can also help facilitate important discussions between both Advisors & Clients as well as between Clients & their family members about important estate planning matters including final wishes. Such discussions will enable Clients and their families to more proactively prepare for the next generation & and will enable financial advisors and their firms to show additional value.

That’s a core mission behind LegacyTracker –  providing a way for Financial Advisors/Firms to reach out to their Clients/Families which also helps those Financial Advisors/Firms to ultimately hold on to assets that might otherwise move. LegacyTracker is also a technology solution that will have particular appeal to younger clients or family members who are on the look out for a technology to make their lives less complex & more mobile.

Customer Advocacy beats Free Coffee

Of course, I`m a bit biased since I have never actually tasted coffee (Long story involving a pact made with best friends when we were 7).

However, there is a lot of talk about Customer Advocacy of late and the impact that being a Customer Advocate can have on confidence and loyalty (retention) for providers. Loyalty…is priceless it leads to retention, praise, cross selling, referrals etc.

Partnering with customers on managing their finances, making them feel confident about their financial future, and taking the lead when necessary helps them see that you are on their side and looking out for their best interests,” so says Beth Youra, Senior Consultant for Gallup.

This comes by way of a Gallup survey reported in April of 2014:  Banks: To Earn Customer Confidence, Make the Conversation About Their Financial Well-Being

”This manifests itself in customers feeling like you are looking out for their financial well-being, which, in turn, makes you seem more selfless and gives customers the confidence that you are in it for them and not yourself.”

Wise words. Loyalty is hard-earned. LegacyTracker, our branded personal financial organizer can help your clients simplify, safeguard and share their important financial/legal/estate information with loved ones and advisors. We think that’s better than free coffee or even a toaster.

 

 

Safeguard your family

Safeguard your family from What If scenarios

Talking about Money has historically been considered as “UnFun” but these days it’s critical. What’s even less fun than taking about Money? Money and Death.     Yes. Thinking through all of the unpleasantness that comes with death is considerably UnFun but being unprepared for a sudden or unexpected death in your family is even more so.

Statistics indicate that women will often outlive their husbands but that’s not always the case. We all know Stuff happens & that includes BAD Stuff. That’s why it’s important that each spouse take an active role in their household/family finances and know where stuff is and what they have.

Others have talked about this in their columns or blogs like the Blunt Bean Counter in his blog post “Stress Testing your Spouse’s Financial Readiness if you were to Die Suddenly” and Roma Luciw in her Globe and Mail Article Why you should stress-test your finances for a sudden death 

The bottom line is about safeguarding your family from additional grief & expense in an already stressful time by ensuring that both spouses have all the important information necessary to manage through such a time.

Let me say that I’m quite familiar with the kinds of scenarios that can occur when a death happens. As an Accountant, I have helped many overcome all sorts of challenges that have been brought about by an untimely death of a loved one (not that there is such a thing as a timely death)

I’m also quite personally aware of the stress that comes from being the “CFO of the family“. That would be the spouse that manages & holds all of the important details relating to the lives of your family. Your family might work that way as Lots of families do: One spouse is the CFO & manages all of the important financial/legal/estate paperwork & the other spouse operates (sometimes blissfully) unaware of all of those important details behind your household finances. It’s not a good position to be in no matter which role you have. As the CFO in my family, I still worry that my spouse is not going to know where everything is and whether he will “leave money on the table” It’s a pretty UnFun responsibility to be the one solely responsible for the “info”.

And now you know some of my personal secrets & some of my motivation behind LegacyTracker. it’s about ensuring that my family and yours have their important details of living life documented, safeguarded & shared with those who need to know. Details like:

  • Where the will and power of attorneys are
  • Having a readily available & accurate list of assets with account numbers & contact information
  • Having a current and comprehensive list of passwords for your digital assets and non-digital assets
  • Knowing the location of important legal agreements like income tax returns and real estate deeds
  • Knowing exactly how much insurance you have and who are your insurance contacts
  • Having the opportunity to write and share details about your final wishes/arrangements

Nothing can be left to chance.  It’s up to each of us to safeguard our financial legacies and that’s how LegacyTracker can help. That’s what we’re about.

 

Help clients simplify finances

Trusted Advisors help Clients Simplify Finances

Good article from Tessie Sanci of Investment Executive this past month

Be the Key Advisor for your Key Clients 

“Your high net-worth clients are looking to simplify their finances and their lives. Finding a trusted advisor can help to co-ordinate all their financial affairs – and make life easier.”

Life is BUSY. We think ALL clients are looking to simplify their financial affairs.

In this article, Tessie refers to the David Maister, Charles H. Green & Robert M Galford book…”The Truted Advisor” where the authors outline what they see as various levels of Advisors providing professional services. I read this book many years ago when building up my accounting firm & yes it made a difference. The opportunity is there in many professions to become more than simply a vendor who performs the required and needed tasks related to his or her profession. A Trusted Advisor however, is one that becomes a “valuable resource” that can be consulted on strategies not solely related to the advisor’s specialties.

Giving in order to receive (eventually)” helps build client trust. Becoming a resource for your clients helps build their trust and helps them simplify their lives. That’s valuable. Sanci quotes Francis Sabourin who is an advisor with Richardson GMP Ltd. in the article ” It’s a good way to show (clients) that I care…It’s not always about investments” 

LegacyTracker is also a resource for clients as well.  Our online solution helps your clients simplify their busy lives by having one safe place to simplify, safeguard & share their important financial, estate & legal details from.

Read the entire article here  from Tessie Sanci in the Investment Executive

 

 

Parents, Kids & Money

Interesting but worrisome survey from T. Rowe Price “Parents, Kids & Money Survey” 2013 The survey set out to understand the basic financial knowledge, attitudes and behaviours of both parents and their children age 8-14 . The survey included 1.014 parents and 839 children in the US. The study was quite comprehensive..but we will share 3 with you here

The complete study can be found here

Kids and Money

And…Where do family conversations on money fit with everything else there is to talk to our kids about?

Topics to discuss with kids

Interesting but more worrying.. 50% or less of parents surveyed have strong financial habits to pass along to their children. Notably: Only 46% had life insurance. While 46% are saving for a family vacation & 39% save throughout the year for holiday shopping; only 26% have an up-to-date will.

Parents not covering financial basics

 

Please.

Get a will! We’ll be reminding you to get one …along the way with LegacyTracker.

And also? Let’s work on some of these basics so we as parents can pass them along to our children.

 

Canada's Financial Services Sector

Canada – A robust but confusing financial sector

Behold Less Bewilderment 

Thanks to H2 Central for the great infographic Canada’s robust financial sector my seem a little less confusing. H2 Central published their helpful infographic last week which they indicated, came about from “periodic encounters with clients bewildered by the intricacy of our respected but complex investment sector” 

Indeed. It’s a robust sector and challenging to grasp; full of regulators, financial literacy organizations, educators, advisors, investment companies, investment producers & distributors some who are AND some  who are not connected. Not sure? Check out the colour codes and note the associated abbreviations/acronyms …

 

 

LegacyTracker Net Worth Tracking

Net Worth/Worth Tracking

Some say Net Worth is a GOOD number to track in order to determine whether you are making financial progress. Others say it’s the ONLY number to track.

What is net worth ?

Net worth, (also generally referred to as wealth) is one measure of an individual’s material wellbeing or financial success, measured by the amount by which assets exceed liabilities or debt. And yes; it’s possible to have a negative number especially for young professionals with student debt; don’t despair.

Assets – Liabilities = Net Worth 

Why does it matter?

Knowing your net worth is an important aspect of personal financial planning. It can be a wealth strategy. Net worth can also be a benchmark for wealth or financial fitness much like your weight is a benchmark in a weight management program. It can also be a powerful motivator to save more, spend less, pay off debt or to work proactively with a professional financial advisor to map out a financial plan.to financial success.

Net worth is worth keeping track of as it also represents the degree of flexibility one might have to respond to unexpected or unforeseen circumstances like a job loss, an unexpected illness or a drop in the financial markets. A healthy net worth can also provide individuals with opportunities like starting a business or going back to school. Ultimately, retirement will also be funded by net worth. At some time in the future net worth will be utilized in order to fund retirement.and cover living expenses.

Track or Update regularly

One thing is certain. Net worth will fluctuate over time but hopefully it will grow in the right direction. Regular updates can help you keep on track with your financial goals; a financial checkup; much like going to the doctor for a health checkup. Regular updating can help ensure that savings and spending are held in check. You don’t need to be an accountant to calculate net worth; a simple excel spreadsheet or an online tool can be used. We’ve included net worth tracking as an important feature inside LegacyTracker

Compare cautiously

A growing number of bloggers now post their progress around building their net worth online for all of their readers to see. That’s one way to compare. They say it keeps them accountable. I’m an accountant; we like to keep things nice and confidential.

Easily found comparables might be the annual surveys that report the average net worth of Canadians or Americans as an indicator of financial well-being over time. For example, the average Canadian household net worth broke $400,000 at the end of 2012, which was a 5.8% increase over 2011; slightly ahead of the US by about $19.000.

Whether or not it is used as an indicator of financial status, tracking net worth can be motivating and so keeping it updated on a regular basis and making sure you are making progress, is a positive move. I have found too many clients who are so focused on the estimated value of their assets (say the growing estimated value of a home in Toronto for example), that they don’t take into consideration the growth of their debt over time.That’s the advantage of tracking Net worth as opposed to Total Asset Accumulation.

It’s the NET and the NET movement in financial progress that matters over the long-term for you and your family. That’s the reason we included a Net Worth tracker in LegacyTracker.