Financial planners help clear out financial clutter to reduce risks, alleviate stress and maximize value of investments.
Good intentions gone bad.
That thought might pop into your head when you open a closet, enter the basement or park in the garage and confront heaps of "stuff" accumulated over time.
You know you should tackle this tangle, but it's daunting and much easier to put off.
So you do.
For many, there's another less visible, more consequential clutter problem that begs for procrastination-putting a messy financial house in order.
Financial clutter is not unlike the disarray found in particular areas of your house. But instead of old clothes, tools, unused appliances and boxes, you've accumulated multiple bank accounts, numerous credit cards, antiques and collectibles and dated 401Ks, IRAs, CDs, bonds and stock holdings.
Over time, people build up their net worth and financial independence and may be quietly successful, but from the outside it's difficult to see, says Paul Gydosh, managing director of Kensington Wealth Partners Ltd.
As a financial adviser, Gydosh helps people sort out and consolidate their stockpiled fiscal holdings to gain a clearer economic picture and to avoid unneeded risks.
"They've done it by accumulating stuff," Gydosh says. "When we meet with them we congratulate them on their accumulated stuff, but part of our role is to say this is where you are and here is where you want to be."
While the literal costs of financial clutter can be difficult to pin down, the toll certainly exists on a personal level and can lead to problems like identity theft, misplaced and unpaid bills, duplicate spending, lost accounts, inability to borrow, confusion and stress.
For those reasons, financial organization is important.
"If you have a simple, clear understanding of where you are, it's a lot easier to get where you want to go," Gydosh says. "If you are out of balance, there is too much risk for the level of return."
Gydosh likens his financial investigative work to the reality series "American Pickers," which follows Mike Wolfe and Frank Fritz across the country in search of antiques and collectibles.
"They go see people who have accumulated stuff; it doesn't mean it is all bad stuff," he says.
Financial advisers help clients by auditing their holdings, though Gydosh shies away from using that ominous-sounding term. The key is to make the money a person has today mesh with the goals they have for themselves and family, he says.
"Like the first step in any trip or adventure or for the next phase of life, we have them take a step back to see what they have," Gydosh says. "You may hold losses and we need to capture and realize it. It can help down the line to sell something to free up something else."
Consolidation and elimination are often the tools of choice to clean up the clutter. But emotional attachments can interfere with the process.
"We've had instances where people fell in love with individual stocks and mutual funds and won't let go of them," Gydosh says. "Or it could be a gift from grandma, but we have to call a spade a spade. To me it is just dollars, and if you want to be most efficient with the money, we have to clean some of this up."
Financial clutter and the need to take action can be a nebulous concept for some, but everyone and every business is a candidate for this problem, says Stephan C. Smith, a principal at Holbrook & Manter CPAs.
"It's in the eyes of a beholder as to what it means. Everyone has their own interpretation," Smith says. "I look at it in the highest sense-if it gets in the way and doesn't add value but takes time and energy, it needs to be evaluated."
For many, a fresh set of eyes can be beneficial in tidying up the financial house.
"When someone looks at it in a different way, they can peel out what is relevant and see what are the drivers," Smith says.
Advisers search for the KPI-key performance indicators-which can be four to eight items, Smith says.
"Everything else is clutter and fogs the overall picture," he says. "Once you focus on the right or main things, you get the best results and can go forward."
The causes of increased clutter can be many, but underlying much of it is human nature, Smith says.
"It's not a criticism, but it's in human nature to do what you've always done, but if you do it the same way you will get the same results," he says.
It's also not uncommon to put off the inevitable, sometimes until it is too late, says Victor Ferguson, a partner in Vorys, Sater, Seymour and Pease LLP who specializes in estate planning.
When one spouse has died, their partner can be saddled not only with grief, but also a hodgepodge of financial disorder.
"Typically one spouse may handle all of the finances," Ferguson says. "If they enjoyed that and it is cluttered and they die, the remaining spouse will be in a world of hurt."
When couples do plan for the future, Ferguson tries to convince them to work together to understand their financial situation.
"It's easier if one handles the finances to streamline and bring the other spouse into the loop to let them know what is out there in case something happens," he says. "If you streamline while you are alive, it makes it a whole lot easier for your family at death."
Becoming aware of a need to de-clutter finances often is a timing issue, Gydosh says.
"If you say this to a 27-year-old, it would be rare that it would resonate. They haven't accumulated as much and they should focus on growing and living," he says. "If someone has just retired, which is when we often meet with people, their full attention is on this."
No matter the age, in the long run, Gydosh says, cleaning the clutter can bring rewards, both financially and physically.
"After you take action, in about three or four months you review where you are now to see what you've done," he says. "Without exception, I've seen people physically relax and say, 'I feel so much better.'"
TC Brown is a freelance writer.