Asset-Map’s CEO Describes The ‘Family CFO’ And ‘Non-CFO,’ The Challenges Facing Them And How To Engage And Educate The Non-CFO
We often speak of “the client” as if there is only one client in a relationship, but those who serve high net worth families know that there’s often several clients in one relationship. Even with mass affluent clients, HENRYs or other typical advisor-client scenarios, the advisor frequently serves households with two partnered adults.
Often, one of the clients in that relationship gravitates to financial matters, communicates more with the advisor and shoulders most of the financial decision-making. H. Adam Holt, CEO and Founder of Philadelphia-based Asset-Map, refers to that person as the “family CFO.”
His firm creates maps of household financial instruments and positions. Thousands of financial professionals use its tools to support 1.25 million people and map over $1.5 trillion in financial instruments. The firm experienced revenue growth of approximately 23% in 2022, and partners with firms such as Cetera, Morningstar and CPA.com.
We caught up with Holt to ask about the difficulties the “non-CFO” faces and how advisors can work with that person in a client relationship.
WSR: How would you describe a client who is the “family CFO” versus one who is not, and what difficulties do the clients who are not family CFOs experience?
Holt: A “family CFO” is one member of a household who shoulders the responsibility for financial decisions. This role can emerge either from one’s keenness or out of sheer necessity. The non-CFO member becomes increasingly dependent on the family CFO, not just out of trust but sometimes due to feeling intimidated or out of the loop. This dependence can create an imbalance of power and knowledge in financial matters. Simultaneously, the family CFO faces the pressure and stress of making decisions that affect not just themselves but the entire family.
Without standardized financial education, even well-intentioned CFOs may struggle with intricate topics like savings, investments and taxes. Hence, it’s crucial for both members to actively engage in financial education, bridging the knowledge gap and alleviating undue stress on the household.
WSR: Aside from resorting to the family CFO, how can an advisor teach a non-CFO client to manage their finances?
Holt: Unfortunately, the CFO of the family tends to receive all of the knowledge, details, reports and awareness, while the other member is in “trust mode,” accepting their partner has taken care of it. Advisors rarely push back on this dynamic because it’s easier to converse with the individual who is running point on the family finances.
However, it’s incumbent upon financial advisors to recognize that they have two clients in many cases, not just one. And it’s an advisor’s obligation to seek opportunities to educate and engage the non-CFO partner. Doing so can be simpler than you think – use technology to include them on all communications, so that they share access to archives, and simplify their experience by providing tools, like Asset-Map or others, that make these topics easier to understand.
Lastly, I’d suggest offering training around personal financial management tools to ensure the non-CFO is empowered equally as a client.
WSR: How does an advisor convince and teach that client to track and prioritize their financial wellness?
Holt: If you look past the complexity of financial planning and break it down into its most impactful components, every client must be trained on three critical aspects.
First is budgeting and knowing where their money is currently going, and second is understanding their current inventory of financial decisions. Typical households have as many as 25 financial instruments, including cash flows, assets, liabilities and insurance policies.
Third is knowing how they are tracking relative to the financial goals and ideals that they share, such as retirement or education funding.
If you can educate on these three and get clients to understand not only where they are, but where they’re going, you start to see them more engaged and empowered. Ultimately, financial planning needs to focus on helping people gain confidence in these three areas, which requires education, communication and collaboration. Advice engagement experience tools, which support these aspects, will dominate the evolution of advice delivery going forward.
Janeesa Hollingshead, Contributing Editor at Wealth Solutions Report, can be reached at email@example.com.