How to Create a Master Directory

Note: This article is part of Morningstar's September 2016 Retirement Matters Week special report. A version of this article appeared on April 18, 2016.

A financial planner I know has a business that might best be described as "financial reconnaissance." For a fee, she'll sift through and put order to the financial documents of a person who has died or become incapacitated. She'll track down the person's financial accounts and document all of the assets. She'll save relevant paperwork and toss out or shred those documents that are unnecessary. She'll have valuables appraised. Depending on the complexity of the situation, her "cases" can take weeks or even months.

My first thought upon hearing about her business was that it's a tremendous idea. There's such a need for this type of service, particularly given how geographically dispersed, and plain old busy, so many families are these days. And figuring out what to save--and what can safely be disposed of--requires a working knowledge of financial matters; to a layperson, a prospectus can look just as important as an annual account statement. (If you've cleaned out the financial files of a loved one who has passed away, you've probably observed this firsthand; people typically choose to save too much rather than risk throwing out something important.)

My second thought was that how much of the work she does would be unnecessary if all investors made it a habit to create a very basic master "directory." Such a document--whether a PDF, an Excel file, a Word document, or something you've scratched out by hand--can serve as an inventory of your financial accounts and contact people. Assuming you keep it up to date as the years go by, such a document can serve as an invaluable tool for your loved ones if, for whatever reason, you can't manage your assets on your own. When I'm out and about speaking to groups of retirees, I often tell them that if they take one action item away from my talk, it’s that they should go home and create such a document, keep it safe, and let a trusted loved one know how to access it.

To help light a fire under you to get it done, we've created this Master Directory template. Note that this template is designed for users with access to Adobe Acrobat, which enables you to password-protect your document. If you are opening this template with Adobe Reader (rather than Acrobat), you'll need to print out the document and write your answers in the fields provided. You'll then need to store your document in a safe location, such as a locked file drawer or safe deposit box.

Alternatively, if you’d like to customize your document to suit your parameters, you can set up a file with similar fields in Microsoft Excel or Microsoft Word. Both programs enable you to password-protect your document.

No matter what format you use for your directory, be sure to follow these steps.

Step 1: Document key individuals. On Page 1, list the individuals and financial firms that you do business with, along with their contact information. Append additional pages if needed--for example, if you have separate insurance agents for life insurance and property and casualty insurance, or if you have multiple financial advisors and bankers.

Filling out this page may also have the salutary effect of sparking an awareness that you need to revisit certain aspects of your financial life. In filling out my own master directory, for example, I remembered that our family's estate-planning attorney had retired and that we needed to research a replacement.

Step 2: Document key assets. The bulk of the master directory centers around documenting your various financial assets: company retirement plan accounts, IRAs, brokerage accounts, bank accounts, and real estate holdings, among others. Don't get too bogged down in tracking down your account values to the penny, as they're obviously subject to change; a ballpark estimate is fine.

Here again, you may need to append additional pages to accommodate all of your accounts. If you have many accounts, some of them quite small, use the master directory process as a call to streamline. Consolidating account types can reduce financial clutter, obviously, and maintaining fewer larger accounts may also entitle you to breaks on fees, free financial advice, or other perks.

If you own collectibles or other valuable financial assets not accounted for on the form, attach additional pages to document those as well.

Documenting your financial assets can also help provide the baseline for a review of your estate-planning documents. If you have major assets that are unaccounted for in your estate plan, it's time to update your plan to incorporate them.

Step 3: Document key liabilities. Page 4 is for the other side of the ledger--your household's key liabilities, including mortgages and credit card debt. At the risk of stating the obvious, if your liabilities dwarf your assets, that should be an impetus to give your plan a thorough review.

Step 4: Keep it secure. So, you've just completed a compendium of highly sensitive information. That calls for taking steps to keep the document safe. If you created your master directory using Adobe Acrobat, go to File>Properties>Security and check the box marked Require a password to open this document. (As noted above, Adobe Reader doesn't offer password protection; you'll need to print out your PDF, write your answers in the fields provided, and save the physical document in a safe place.)

If you created the document in Microsoft Excel or Microsoft Word, click Info in the left navigation pane. On the Permissions tab, click on Protect Workbook (or Protect Document, for Microsoft Word) and then Encrypt With Password in the drop-down menu. You'll then have the opportunity to enter your own password.

If you created a physical document and hand-wrote your responses, be sure to save it in a safe place, such as a locked file drawer or safe-deposit box.

Step 5: Let a trusted loved one know. The last step in the process is to let a trusted loved one know that you've created this document, as well as where to find it and how to gain access to it. You'll want to let your spouse know of this document's existence, as well as the person to whom you've given power of attorney for your financial matters and/or your executor.