Your annual review with your financial advisor is an important time to reflect. During this time, you should decide whether or not you are happy with your progress or if it’s time to change your goals. It’s also an excellent opportunity to get answers to any burning questions you may have about your finances. Read on to find seven questions to ask during your next annual review.
1. Are there new opportunities I should take advantage of?
Each year, the financial landscape changes, and new opportunities arise. Your financial advisor should keep up with these changes and let you know if there are any new investments or strategies you could explore.
2. What fees am I paying?
Fees and commissions are a fundamental part of working with a financial advisor. However, you should always be aware of the fees you’re paying and ensure they are justified by the services you’re receiving.
This is because even a small difference in fees can impact your overall returns. For example, let’s say you’re invested in a mutual fund with an expense ratio of 1%. If the average expense ratio for similar funds is 0.5%, that extra 0.5% you’re paying could eat your returns over time.
3. Should I readjust my emergency fund?
No one likes to think about losing their job or suffering a financial setback, but it’s essential to have a plan in place in case it happens. It’s also important to revisit this question each year, particularly if you have had any major life changes. Your financial advisor should be able to provide you with feedback on different ways to weather an unexpected expense—such as a major car repair. Here are a few topics to touch on during your annual review:
- Selling off investments
- Taking on debt
- Using your emergency fund
4. What’s the status of my retirement savings?
If retirement is one of your financial goals, you should monitor your progress. Your advisor should be able to update you on how much you’ve saved so far and how it has performed. They should also be able to help you decide how much to save for a comfortable retirement.
5. How are my investments performing?
Of course, you want to know how your investments are performing. After all, that’s one of the main reasons you’re working with a financial advisor in the first place. Your advisor should be able to give you a clear update on how your investments are doing.
They should also explain why they’ve made any changes to your portfolio and what their strategy is going forward. Don’t be reluctant to ask for more detail if needed.
6. How can I improve my financial situation?
Any good financial advisor will want to help you improve your financial situation by making you aware of all your options. After all, that’s how they’ll continue to earn your business. Remember to ask them about strategies on how to improve finances so that you can decide what is best for you. Here are a few topics you may want to explore:
- Paying off debt
- Investing in certain types of assets
- Making changes to your budget
7. How can I lower my taxes?
Taxes can take a sizable chunk out of your investment returns, so trying to minimize them as much as possible is important. Your financial advisor may recommend some strategies for doing this, such as:
- Investing in tax-advantaged accounts
- Timing your investments
- Harvesting losses
Have your advisor explain the tax implications of any investment decisions you’re considering.
Plan for the Future with the Right Financial Advisor
We hope this guide helps you navigate your next annual review! Don’t shy away from asking tough questions during this time. After all, it’s your money and you have a right to know what’s happening. Reviews also serve as good reminders that a plan alone isn’t enough when it comes to working toward your goals; it also requires constant monitoring so that you can decide whether to stay on course or shift gears.
Should you decide to shift to a new financial planning strategy, our team at Good Life Mt. Pleasant is here to help. To schedule a complimentary one-on-one consultation, contact us today. We can’t wait to help you plan for the future!
The opinions voiced are for general information only and are not intended to provide specific advice or recommendations for any individual.
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.