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  • Writer's pictureKatherine Fonville

Creative Questions To Ask Your Financial Advisor About Your Year-End Plan

Updated: Feb 15, 2023



The end of 2022 will be here before you know it. And you don’t want it to pass without checking in on your financial plan. Doing so helps you stay ahead of year-end deadlines and maybe even identify areas for improvement going into 2023.

As you prepare for your year-end checkup, download our end-of-year checklist, and consider asking your financial advisor these important questions to get the conversation started.


Question 1: Am I On Track To Hit My Financial Goals This Year?


Do you remember the goals you set 12 months ago? No? Well, now is an excellent opportunity to remember what you hoped to achieve and check your progress toward those goals.

Perhaps you’re preparing for retirement in the next 5 years, or maybe you’re making a cross-state move, or you’re hoping to shore up your cash reserve.

Since your financial advisor should be well-versed in your goals, they’ll be able to help you understand how your financial choices either are or aren’t supporting those initiatives. For example, did you overspend on travel this year? Is your portfolio still aligned with your timeline, risk, and goals? Is your net worth where you want it to be?

No matter what, it’s important to talk with your financial advisor to ensure you’re on the same page. Maybe your goals changed, or you simply placed them in a different order of priority when you first discussed them with your advisor.

That’s okay; life changes and your plan should adapt with it.

  • If you are on track, great! Have a follow-up discussion about how you can build on that momentum heading into next year.

  • If not, be sure to discuss with your advisor about recommendations for how to improve and why those are the steps to take.


Question 2: Is There Anything I Can Do To Put Myself In A Better Tax Situation?


This question is a must! Year-end tax planning is critical because many of retirees' most notable tax-saving moves have a December 31 deadline. Ask your advisor if there are any strategies you should consider before year-end.

Many of your options will involve choosing between accelerating or deferring income. While you won’t be able to avoid taxes entirely, you often have some choice regarding when you will pay them. Your advisor should be able to help you identify the best time.

Some topics to discuss with your advisor include:

  • Do you plan to itemize or take the standard deduction?

  • What deductions or tax credits are you eligible to claim?

  • Can you save any more for retirement or other vehicles, like an HSA or deductible IRA, that could lower your taxable income?

  • Are you investing in a tax-conscious way? Remember that tax-loss harvesting must be completed by December 31!

  • Are you properly leveraging your charitable giving strategy? Retirees have several options like a QCD, DAF, donating appreciated assets, and more.


Question 3: Is My Estate Plan Up To Date?


Take some time to look at your estate planning documents each year. You don’t have to re-hash the entire process, but a quick review can help you ensure the documents and choices still reflect your estate planning goals. Is your will still accurate? What about a medical directive? Do you have a power of attorney?

Even something as simple as updating beneficiaries due to typical family changes (birth, death, marriage, and divorce) can save your family a lot of grief and hassle down the road.

Your financial advisor can help you talk through these things and coordinate with an estate planning attorney if you need to update them.


Question 4: What’s The Best Way To Give To Charity?


There are so many ways to give to charity beyond cutting a check, especially for retirees, and some of these ways also provide additional tax benefits. Before the end of the year, ask your advisor about:


  • Qualified Charitable Distributions (QCDs). If you are subject to RMDs you don’t necessarily need for living expenses, consider donating them directly to the charity. When you do this, you can avoid taxes on the distributions.

  • Donor Advised Funds (DAFs). If you regularly donate, ask your advisor about DAF strategies. Many retirees find it helpful to “bunch” multiple years' worth of donations into a single year. Doing so is especially helpful if you must clear the itemization hurdle to take advantage of other deductions.

Don’t forget you can also give your time! Volunteering regularly is an excellent way to contribute to your community and meaningfully impact causes you care about.


Question 5: Is My Investment Strategy Still Aligned With My Needs?


Your investments fluctuate throughout the year, so it’s a good idea to review them and see if you need to rebalance them even if your performance has been good and you haven’t changed any goals.

If your goals have changed, you may need to re-evaluate your asset allocation. Ask your advisor to review your plan and highlight what has (and has not been) working for you this year or what you might need to change in the future.


Question 6: What Issues Should I Consider During a Recession or Market Downturn?

Nobody likes a recession. But, when the economy gets hit, there are steps you can take to improve your financial situation in many areas, including:

  • Cash flow

  • Assets and liabilities

  • Tax planning

  • Retirement planning investments

  • Broader investment management

  • Longer-term planning considerations

For example, will your cash flow be tight? Your financial planner may help you review your budget to help reduce spending, especially with discretionary spending.

Is your investment portfolio down? It may make sense to harvest losses now to help reduce capital gains in future years. Perhaps rebalancing your investment accounts could also keep your money and risk better aligned in down markets.

If retirement is around the corner, actions you take during a recession can help ensure that you make financial decisions that keep you on track. Do you need to make any changes to your retirement accounts, like allocations?

Bonus: Based On My Goals, What Financial Changes Should I Make In The New Year?

Perhaps the greatest benefit of financial planning is knowing which steps to take in advance. After you’ve reviewed your plan, goals, and progress with your advisor, ask them to outline the steps you can make in the new year to put yourself in the best position possible.


Examples of things you should discuss are:

  • Do you have to change your retirement withdrawal plan? How much do you need a month?

  • Do you have to curb your spending given market conditions?

  • Perhaps you can look to decrease costs by dropping unnecessary insurance policies and redirecting the premium costs to your investments.

  • Would it make sense to purchase additional insurance or other vehicles, like an annuity?

  • Are you maximizing your Social Security benefits?

  • Lifestyle changes: are you planning on returning to work, traveling more, etc.? All of those things could impact the best course of action for your money.


Building A Solid Year-End Plan


A financial plan is a fantastic tool; it helps you live the life you want on your terms. For it to be most effective, you need to review, track, and update that plan, and the end of the year is the perfect time to accomplish that task. These key questions are some of the things we address with our clients each year and can help you initiate a conversation with your advisor too.


Covenant Wealth is a fee-only fiduciary wealth management firm that is dedicated to giving custom financial advice that helps you retire confidently and comfortably. Our incredible team of advisors includes CFP® (CERTIFIED FINANCIAL PLANNER™) professionals who can look at your finances holistically.

We ask and help you answer the right questions that keep your plan working for you all year round. Don’t forget to download our end-of-year checklist and schedule a free consultation to see how we can help you improve your financial situation.


 

Katherine Fonville

Katherine is a fiduciary, fee-only financial advisor at Covenant Wealth Advisors serving clients across the United States. She specializes in helping women aged 50 plus create, implement, and protect a personalized financial plan for retirement.

Katherine is the founder of Covenant Wealth Advisors and resides in Richmond, VA with her family.


 

Disclosures:

Covenant Wealth Advisors is a registered investment advisor with offices in Richmond and Williamsburg, VA. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital.


The views and opinions expressed in this content are as of the date of the posting, are subject to change based on market and other conditions. This content contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.


Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account.


Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax, or legal advice. If you would like accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs. No advice may be rendered by Covenant Wealth Advisors unless a client service agreement is in place.

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