Four Questions to Ask During Your Annual Financial Review
John Leeming CFP®

Whether you’re gearing up for retirement or just starting your career, regular financial checkups are critical to ensure your monetary well-being. With the rush of the holidays now behind us and before 2018 is in full swing, January is the perfect time to meet with your financial advisor, evaluate your personal finance objectives and adjust your investment strategy as necessary.

Here are a few questions you should discuss with your money manager in order to effectively prepare for the year ahead.

1. Have your goals changed?

No matter what stage of life you’re in, measurable financial goals will help you stay focused and practice consistent, sensible monetary habits. Long-term milestones should be geared toward major life decisions, like retirement or paying off your house. Short-term goals, as the name implies, should focus more on immediate objectives—like buying a car, saving for a dream vacation or remodeling your kitchen. Although your objectives shouldn’t constantly be in flux, the beginning of the new year is the ideal time to evaluate your progress and refine as needed. This practice will help you re-focus and gain momentum for the year ahead.

2. Are you satisfied with your year-end returns?

While you should regularly review your financial statements (transparent, frequent communication with your money manager should be a standard practice for all investment advisory firms), the majority of adults are not well versed with how their money is being invested. We encourage you to walk through your year-end statements with your brokerage firm or investment advisor and evaluate both your asset allocation and mix of investments. Do you consider your return acceptable? How much were you charged in fees? With a comprehensive snapshot of how your investments performed, you’ll feel more confident about measuring your progress.

3. Are you prepared for tax season?

During your financial checkup, you should also review your tax return. You’ll see your capital gains tax, how much you received in dividend income, how much you donated and other key monetary decisions from the past year. Depending on whether your household is in the accumulation or spend-down phase of your life, your financial advisor should be able to offer strategies that take advantage of your retirement account investments, distributions and deductions to minimize your tax burden.

4. Are your goals and the firm’s investment strategy aligned?

Your financial advisor needs to know your financial goals personally in order to provide you with the invaluable, individualized counsel you need during times of both market abundance and uncertainty. On the other hand, you should be familiar with the firm’s investment philosophy, which is a set of beliefs and principles that drive an advisor’s recommendations and approach to handling your wealth through the long term. Make sure you understand your advisor’s philosophy, and that it aligns with your financial goals and values.

Just as you undergo regular health checkups, your finances should receive similar treatment. Reviewing your year-end statement with your advisor can help you better understand how your money is being invested and set you up for financial success in the year ahead.