On its face, financial hoarding doesn’t seem like such a bad thing. What’s wrong with accumulating assets? But this good behavior can easily become hoarding when taken too far. When accumulating for its own sake becomes the goal, you, or someone you know, might be crossing over into financial hoarding.
Like the hoarding of physical objects, financial hoarding can get out of control because all those different accounts and pools of money become too overwhelming to deal with. Ignoring the situation only makes it worse and more difficult to untangle, but that’s exactly what people want to do. I experienced this in my own family.
“Everything you need is in the black box at the back of my closet.”
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The first few times my husband’s grandfather said this to me, I stayed silent. I was an in-law, so I felt awkward about talking finances directly with him, rather than involving the rest of his family.
But then he mentioned something about stock certificates.
That’s when the alarm bells went off. I could no longer sit in awkward silence. I knew I had to act. And, because he wasn’t getting any younger, I had to act quickly.
What Is Financial Hoarding?
Being in the business I’m in, I’ve seen this scenario before. An older relative has amassed a large variety of investments and bank accounts over a lifetime, thinking that they’re following the diversification rule by spreading their wealth around. But much like squirrels in the winter, people can forget where they left this account or that stock.
It’s just a form of financial hoarding. And it can potentially create a mess for heirs when the time comes to settle the estate — something that could take years to unravel.
Think about Aretha Franklin. At the time of her death in 2018, the Queen of Soul didn’t have a will (although multiple handwritten wills have turned up (opens in new tab) in the years since her death), despite having an estate worth $80 million. Her estate was truly sprawling, encompassing real estate, luxury cars, furs and uncashed royalty checks.
It can be a nightmare to settle an estate after the account holder passes away. You can’t benefit from their knowledge. The same goes for when a relative is cognitively impaired and can’t help guide you through the process. But imagine how much more the situation is to handle when combined with financial hoarding.
What Causes Financial Hoarding?
Most often, the cause of financial hoarding boils down to fear — fear of going broke, fear of not being able to access money, fear of being taken advantage of, fear of technology and so on.
For my husband’s grandfather, the idea of being able to see all the stock certificates in his black box was reassuring. But in reality, it was the opposite. The certificates could easily have been stolen and therefore gone forever.
What Should You Do if You or Someone You Know Is a Financial Hoarder?
Financial hoarding may not be obvious at first. It wasn’t until my husband’s grandfather was nearing the end of his life and talking about his finances that the family tuned in to the issue. Once you realize what’s going on, there are some steps you can take to untangle the financial mess. The job will be inordinately easier if your loved one is still alive and cognitively aware, since there might be legal documents to sign as you work through accounts.
Consider these steps:
1. Convert From Paper to Digital
It’s 2022. There’s no reason to have paper records. In fact, almost 20 years ago, the Group of Thirty (opens in new tab), a collection of global business and government leaders, called for an end to paper stock trading worldwide. Here’s why: Refinitiv Securities Information Center, which operates the SEC’s Lost and Stolen Securities Program (opens in new tab), reports that $48 billion worth of stock certificates were reported missing or stolen last year. (You can fill out this form (opens in new tab) to track down lost or stolen securities.)
To convert paper-based stock certificates to digital versions, send them to your financial adviser or custodian (such as TD Ameritrade, Schwab, Fidelity or Pershing), who can add them electronically to your account. If you don’t work with a financial adviser and hold stocks directly, you can deal with a transfer agent, a firm that keeps a record of a company’s shareholders, that will do the same.
2. Consolidate Accounts
Long lines of depositors outside banks trying to…
Read More: What Is Financial Hoarding and How to Fix It