7 Things Your Advisor Should Review Annually


For a consumer, the sheer number of titles currently in use by those of us in the financial services industry, must seem bewildering. Add to that, the fact that there doesn’t appear to be any standardization to any of them, and it is understandable why so many clients really have no idea at all what it means to be a ‘financial advisor’. The truth is that so many different financial services professionals are allowed to use the moniker of ‘financial advisor’, from brokers to planners, and everything In between, that the title can, at times, seem a bit hollow.

But for so many of us, there is a certain pride in being a ‘financial advisor’. We strive to advise our clients in all things financial, or put another way, we act as a kind of financial quarterback, in an effort to help them achieve not just success in investing, but in all of their financial goals and endeavors.

In that capacity then, it is imperative, when meeting with clients, to not just go over the performance of their investment accounts, but also, to make sure that we are reviewing that additional information, which can have an impact on other aspects of their financial lives, as well as their investing strategy.

With that in mind, here are 7 things your financial advisor should review with you annually:

1.            Personal Information

Reviewing items such as – address, phone number, email address, and trusted contact information is crucial.

This seems an obvious place to start, but it is surprising how often it is overlooked. The result can be anything from missed correspondence from the advisor or custodian, to checks or statements being sent to the wrong place. This is especially important as clients get older, as many are relying on distributions for living expenses, and if anything happens with the client or their accounts, it is imperative to have the right information on file for whom to contact.

2.            Beneficiary Review & Estate Plan

Beneficiary reviews should be completed for all qualified accounts (IRAs, 401ks, 4033bs, etc.), all life insurance policies (private and work), and any annuity contracts.

A review of the overall estate plan, including wills, trusts and POAs should be completed, to make sure the estate plan in place is still appropriate. It is also important to remind clients to check-in with their estate planning attorney periodically to confirm that the estate plan is up-to-date or if it needs updating.

Where important estate documents are kept is also worth discussing, as well as the name and contact information for trustee(s) and POAs.

Finally, confirm that assets meant to be placed in a trust have actually been placed in the trust. It is staggering how many times we have come across a client who has spent the time and money to develop a thorough estate plan, but then never actually re-titled assets (particularly their home) in the name of the trust.

3.            Cash-Flow

What is coming in and what is going out?  Has your income changed?  Your expenses?  Is there a specific cash need in the next one to three years that has not been discussed yet?  If so, in most cases, these dollars should not be invested in your long-term portfolio. When creating a financial plan, the client’s budget drives so much of the ultimate output, and therefore, the final recommendations, that it is vital to continue to monitor the cash-flow to determine if changes need to be made to the plan along the way.

4.            Cash-Reserves

Cash reserves are money set aside for an emergency or opportunity.  One of our favorite sayings is “without adequate cash reserves, you are not investing, you’re gambling”. The reason is that if any little financial bump in the road (job-loss, new roof, car trouble, etc.) will cause you to tap-in to your long-term investments or retirement savings, you are always in danger of not achieving the long-term returns expected from those investments in the first place. For employed people, at least three months-worth of cash reserves are recommended, and six months is ideal.  For those who are self-employed, six months of reserves are recommended, and twelve to twenty-four months is ideal, depending on the type and stability of your business.

5.            Insurance

Life, disability, long-term care and health insurance should all be reviewed.  Again, “without adequate insurance, you are not investing, you’re gambling”, for all of the reasons noted above. As mentioned earlier, beneficiaries should be reviewed, and comparing what you are offered at work versus what might be available in the open market makes sense too. There are pros and cons to each, which are worth investigating.

6.            Debt

Do you have any significant outstanding debt?  Reviewing the terms and rates of all existing debt is a good idea. Each case is different, so analyzing each one to determine if paying them off, refinancing the terms, consolidating, or keeping them as-is, is the best course of action.

7.            Changing Goals

It’s amazing how often, when you start to ask probing questions about what a client really wants to do with their life, you hear something like “you know, I just don’t want to work until I’m 65 anymore”, or “I’ve been thinking more and more that what I’d really like to do is make olive oil in Spain when I retire”. Obviously, a major change, such as having another baby, or getting re-married, will necessitate a change in strategy, but these other types of shifting goals are important to keep on top of as well, because the farther out you discuss these kinds of changes, the better chance you’ll have to plan and prepare for them.

This is by no means an exhaustive list, and there are many other issues that can and do crop up in the role of financial quarterback on a daily basis, but if you have a ‘Financial Advisor’, and they never inquire about at least some of these topics on a regular basis, it may be time for a conversation about why not.