Beyond Just Investments, These Are the Keys to a Resilient Financial Plan

You've worked hard to build your financial plan, but is your annual review with your financial advisor more than just a quick glance at your investment performance? Unfortunately, for most people, that's where the conversation begins and ends. A truly comprehensive review should go much deeper to ensure your financial plan is resilient for the long term.

The 10 Things Your Advisor Should Review Annually

Here is a comprehensive checklist to help you get the most out of your annual review and ensure all your bases are covered.

1. A Comprehensive Investment Review

This is where most annual reviews begin, but it shouldn't be the end. You should be reviewing not only your investment performance but also the fees you're paying and how those investments are serving your overall financial plan. As I experienced with one client who had the ability to take on 100% equity risk, it became clear that he didn't need to. By reducing his allocation to stocks, we lowered his portfolio's volatility, and he was very appreciative during the next market downturn.

2. Proactive Tax Strategy

Don't just think about this year's taxes; think about your entire lifetime tax burden. Proactive planning can help you take steps now to reduce that future liability. A great example of this came from working with a family who had a lot of concentrated stock. Their daughter was graduating college, in the 0% capital gains tax bracket, and they wanted to make an annual gift. By using some of that stock to satisfy the gift, she was able to sell it and pay no capital gains tax. It was a win-win: we reduced their concentrated position and their overall lifetime tax burden.

3. Update Your Retirement Projections

Don't just accept a static plan. Really dig into your Monte Carlo simulations and see what's driving the projection. Play with the numbers and look at the sensitivity analysis for scenarios like:

• What if returns are lower than expected?

• What if we spend a little bit more?

• What if healthcare expenses ramp up?

• What if we want to travel more?

  A dynamic plan that accounts for these variables is a strong plan.

4. Review Your Insurance

I know this is boring, but make sure you review your insurance coverage at least once a year. The last thing you want is for something to come out of left field and derail all the careful planning and hard work you've been doing. Don't let it sit untouched for 5 or 10 years.

5. Address Your Estate Planning

I know, but trust me—I've seen some of the most challenging situations with estate planning. You need to do more than just pay an attorney to draft documents. You must ensure you have correct beneficiary designations, that your family knows where to find the documents, and that you actually title assets in the name of your trust. Your advisor should be helping you with the implementation steps, not just the planning.

6. Track Your Goal Progress

If your annual review is just "Everything looks good," you're not getting enough value. You need to have specific, measurable goals. Whether it's saving for retirement, a vacation home, or education, you should be tracking a percentage or dollar amount to ensure you're making tangible progress year after year.

7. Plan for Cash Flow

In retirement, cash flow is the name of the game. You're trying to replace paychecks from your job with paychecks from your investment accounts. You need to understand where that cash is coming from—whether it's from dividends, bond interest, or systematic withdrawals—and the pros and cons of each strategy.

8. Utilize Tax-Efficient Investment Strategies

It's not good enough to know your investment's gross return; you need to understand your net result after taxes and fees. A great return doesn't matter if taxes eat it all up. Your advisor should help you understand how your investments are taxed and which types of accounts (taxable, tax-deferred, tax-free) they should go into.

9. Optimize Charitable Giving

Don't give to charity without talking to your advisor. They can likely help you save thousands in taxes. I once had a client who was donating cash to the local zoo. We were able to show them that by donating appreciated stock directly from their brokerage account, they saved on the capital gains tax. It was an easy win that made a big difference.

10. Set Expectations for the Coming Year

Finally, use your annual review to set expectations for the next 12 months. Discuss how many times you'll check in, what your big goals are, and what your cash needs might be. Having this relationship mapped out will lead to better communication and a much stronger partnership.

Ready for a Better Annual Review?

A comprehensive annual review with your financial advisor should be a collaborative session that ensures every aspect of your financial life is in order and aligned with your long-term goals. It’s an essential step in building a truly resilient and tax-efficient financial plan.

At Barrett FP LLC, we offer expert financial planning on an hourly basis, focused entirely on helping you achieve your goals.

Learn more about how we can help you with comprehensive portfolio planning and see if we're a good fit.