Meeting annually with your financial advisor is critical for helping you remain on track toward achieving your goals. Ensuring these meetings are as productive as possible, however, requires participation and buy-in from both parties—you and your advisor.
An effective annual review meeting with your advisor should be an interactive working session, not simply a portfolio performance report or update from your advisor. Your account statements can tell you that. Your annual review meeting should answer the questions that your account statements can’t, such as “Are you still on track?” and “What happens if…?” The more you share with your advisor in advance of and during your review meeting, the more your advisor will be able to help you refine your goals and plans and replace concerns you have with confidence.
Below are seven steps you can take to get more out of your next annual financial review.
1. Review the takeaways from your last meeting. If you’ve been working with the same advisor or firm for six months or more, begin by reviewing any documented takeaways and next steps from your last formal meeting or annual review. Did your advisor deliver on the items they committed to in a timely manner? Have you delivered on your commitments, such as increasing retirement plan contributions or providing information or documentation your advisor needs to perform a specific projection or analysis? A strong client-advisor relationship relies on open and honest communication. If either party is not delivering on agreed-upon commitments, make a point to discuss why and how (or if) it makes sense to move forward together.
2. Gather documents and account statements in advance. If your advisor does not already have access to statements and balances for accounts or investment he or she is not managing, such as your employer retirement plan(s), bank checking and savings accounts, credit card accounts, mortgage, student or personal loans, gather those documents along with copies of your most recent tax returns. Sharing this information with your advisor prior to your review will help ensure you’re both on the same page and working with the most up-to-date information (See how we manage our document storage and account statements here).
3. List any changes in your personal and professional life over the past year. Did you welcome a new child or grandchild? Experience changes in your job, income, or marital status? What about your health? If you’re still working, has your retirement timeline changed? If you’re retired, have any of your plans changed? Do you expect your income to be higher or lower this year? Documenting this information will help ensure you don’t forget to mention something that may impact your strategy going forward.
4. Review your budget. Did you remain more or less on track throughout the year? Or did you encounter unanticipated expenses, such as unplanned medical bills, expensive car repairs or a new roof? Conversely, were you able to reduce debt or other expenses, allowing you to save or invest more? (If you don’t have a budget in place, use this opportunity to ask your advisor for help developing a budget aligned with your savings and spending goals.)
5. Document how you feel about your current situation and circumstances. Are you concerned about the markets or economy? When you think about your day-to-day finances, do you feel anxious or confident? Are you worried about your tax exposure or if you can afford that prestigious, private college that just accepted your daughter? It’s important to share these feelings and concerns with your advisor so you can work together to make any necessary changes or adjustments to your strategy.
6. Consider what lies ahead. Do you or your spouse anticipate any changes in your employment situation, such as a promotion or job change in the near future? What about lifestyle expenses? Do you plan to renovate your home or move, purchase a new car or boat, or take a big trip? Have any of your goals changed, such as when or where you plan to retire?
7. Make a list of your questions. Maybe you want to know if your portfolio is properly diversified given current market conditions, how spending more now may impact your income in retirement, or what you should do with leftover money in a 529 savings plan? Writing down any questions ahead of time will help to ensure you don’t forget to ask about things that are important to you during your review meeting.
As you and your spouse (if applicable) prepare for your annual financial review, remember that your advisor is there to help you, not judge you. If you’re having a tough time adhering to savings and spending goals, talk to your advisor about ways to help you stay on track. If you’re unhappy with some aspect of the service you’re receiving, such as the frequency of communication with your advisor, bring these issues up. This type of feedback is critical. Your advisor can’t improve on the services provided if they don’t know what’s working and what’s not working well for you. That’s all part of ensuring that your annual financial review serves your needs in a meaningful way.