At an annual financial review, it takes words to get the most out of the numbers.
Sitting across the table from your Wealth Advisor, it’s easy to fixate on the bottom line: “Did my investments go up or down and by how much?” Portfolio performance, however, is just the beginning of the conversation. Yearly financial reviews should serve as check-ins about your financial progress, yes, but they are also an opportunity to examine and update your goals and what matters most to you.
“Come to your annual financial review prepared to be a full participant, and you will leave the meeting confident that you have an actionable path to financial success, no matter what changes may have occurred in your life,” says Jama DeHeer, Senior Wealth Planner at Regions Private Wealth Management in Indianapolis.
At Regions, planning is where it all begins, but wealth plans exist to serve long-term goals and are built to be dynamic, not static, as those goals evolve, she says. Annual financial reviews give you an opportunity to relay developments in your life and to share your expectations about the future. Your Regions Wealth Advisor can even update your wealth plan in real time, while sitting with you, to immediately model the financial impact of whatever decisions you make.
For example, a divorce or premature passing of a spouse, a job layoff or unexpected expenses related to an elderly parent can adversely affect your path toward early retirement. It can also impede your ability to invest in a vacation home or to pay college tuition for your children or grandchildren. As a result, your goals may change, or time horizons may have to be amended. Your wealth plan, including the asset allocation needed to achieve a new targeted level of appreciation, may have to change alongside.
While these major life events may be top of mind, there are other milestones in life that you may not be thinking about regularly, particularly around birthdays, that have financial-planning ramifications. “These age-driven changes create opportunities for clients, but they can be lost opportunities as well,” says DeHeer.
There are many key questions your Wealth Advisor will want to review with you on an annual basis, and you should review our major life events checklist before your meeting. But here are a few questions you may want to have in your notes to discuss, depending on your needs.
“What should I do now that my kids are 21?”
As your kids become adults, often custodian accounts must be transferred to the child’s control. Formal planning for the asset transition may make sense.
“Is my emergency fund still adequate?”
If the last few years have taught us anything, it’s that we all need to be prepared for the unexpected. The cash or liquid assets you have on hand can help you weather a storm, but there could be added benefits to cash in a high interest rate environment.
“Should I begin catch-up contributions at 50?”
As you get closer to retirement age, you can make more contributions to your qualified retirement accounts, such as 401(k), 403(b), 457(b) plans and certain IRAs. Your Wealth Advisor can advise you on how to plan for these extra contributions.
“How might the ‘Rule of 55’ impact my wealth plan?”
Normally, you can’t withdraw money from your 401(k) plan before the age of 59 1/2 without incurring a 10% penalty. But if you leave your job at or after 55, the “Rule of 55” allows you to take a penalty-free withdrawal from the 401(k) account associated with your most recent employment (you still have to pay the income tax, however). Rolling over 401(k) funds into an IRA postpones the penalty-free trigger date to 59 1/2.
“Do I have proper levels of insurance?”
There’s life, disability income, liability, homeowners and umbrella insurance to consider. Perhaps most importantly, will you obtain long-term-care insurance or self-insure?
“When should I start taking social security benefits?”
At age 62, you have the option to start taking Social Security retirement benefits. Or not. The longer you wait, up to age 70, the more you receive each month. Your Wealth Advisor can help you strategize when the right time may be for your plan.
“When can I enroll in medicare?”
Usually, it’s time to enroll in Medicare at age 65. You can defer without penalty if you are still working and covered by your employer’s health insurance plan.
“What should my philanthropic plan be?”
At age 70 1/2, you can begin making qualified charitable distributions up to a certain amount from your IRAs. They can be excluded from your gross income up to certain limits.
“When do I need to start taking RMDs?”
You must start taking required minimum distributions (RMDs) from traditional qualified retirement accounts, such as IRAs, at age 73. If you are still working, you can defer mandatory withdrawals from employer-sponsored retirement accounts, such as 401(k)s and 403(b)s, until actual retirement.
“Do I need to update my estate plan?”
Is your estate planning—beneficiary forms, power of attorney, health care directives—up to date, or do you need to adjust anything based on changes in your life, family and wealth?
Discuss what matters most to you
Regions works with—and educates—clients as they work through their concerns at yearly meetings. Come prepared to discuss what issues are top of mind.
Your Wealth Advisor will also focus on risk factors, with the intention that your wealth will last for your lifetime—and perhaps those of your heirs as well. “We educate and then structure your legacy to be protected for many, many years,” says DeHeer.
Talk to your Regions Wealth Advisor about:
- How generational differences can impact your wealth plan.
- How we can better understand your needs and goals.
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