Your Financial Advisor is there to keep an eye on your investments and make adjustments to keep your finances on track. But if your journey through retirement is going to stay on track, you should regularly check in with your Financial Advisor as your life and the economy change.
These reviews (at least quarterly) give you an opportunity to evaluate your goals and make adjustments to your investment and retirement income plan. They also help make sure your investment strategies are still appropriate for you. It is also a good time to take care of housekeeping items such as updating beneficiaries. Tasks like these may seem minor, but they could have a big impact on your finances if they’re neglected.
It doesn’t take long to review your investment plan with your Financial Advisor. Just an hour or two per quarter can keep everyone on the same page and help you to meet your goals.
Let’s take a look at the five reasons a quarterly review is crucial:
Changed Priorities
Life has a way nudging you onto different tracks - real estate transactions, college educations, births and deaths in the family, a change in employment, a new retirement plan, and changes in the economy.
Make it a habit to update your investment plan with your financial advisor whenever these happen, or when you’re planning a larger change, to examine the effects. For instance, if you’re considering buying some land or downsizing your house, it’s a good idea to discuss how these changes will affect your investment plan.
Out-of-Date Investments
An investment plan is dynamic, and it can (and should) change as you change. Some of your investments might not fit with your current plans, and in such a case, your Financial Advisor can make the necessary changes to keep your plan in line with your life and goals.
Your comfort level with risk may change due to a number of factors, and your Financial Advisor can also tailor your investments to your current risk tolerance.
Tax Considerations
Depending on your income and assets, your tax load may change from time to time, and your Financial Advisor should be made aware of these changes. Not only does your life change, but tax laws change as well. Your investment plan may need adjustments in order to reduce your tax bill.
Estate Plan Updates
A problem many face with their estate plans is that they create their plan and then forget about it. Taking time during your quarterly review to analyze your estate plan can keep you up-to-date. Federal estate taxes can change, and you may want to reconsider your plan, depending on marriage, divorce, birth, death, grandchildren’s college educations, and more.
Insurance and Account Beneficiaries
Insurance is an important part of your overall financial plan, but your insurance needs may change from time to time. For example, if your children are grown and independent, the money you have been spending on life insurance might be put to better use in your investment plan. Along with the type and amount of insurance, you need to update your beneficiary information regularly.
For these five reasons, it’s essential that you annually review your comprehensive investment plan with your Financial Advisor. It’s a quick, painless exercise, and in fact, it can bring you significant peace of mind, knowing your financial plan is on track.
