As a financial advisor on Ellevest’s Private Wealth Management team, I love this time of year. There’s just something about the turn of the calendar that gives the air a clean-slate feeling. That’s why I make sure to check in with my clients to keep their finances and goals on track for the year ahead.
But I’m not the only one you should be talking to. Just like you (hopefully) go see your various doctors for annual wellness exams, the beginning of the year is a great time to have a check-in with your whole wealth team, from your financial advisor to your accountant to your estate attorney. Here are some key financial planning questions to bring with you to each meeting.
6 questions to ask your financial advisor
Is my investment strategy still aligned with my goals? Have your financial goals (or life goals in general) changed recently? Did you recently buy or sell a property? Change your retirement plans? Add a new addition to your home? It’s good to have a range of goals, both current and future; you just want your investment strategy to take all of those goals into consideration.
Is my investment portfolio properly allocated? This one’s especially important if you have assets at different financial institutions. It can make rebalancing tricky — you don’t want to accidentally find yourself too concentrated in any one asset class or individual investment. Do you have more than 10% of your net worth in a single stock position? Are you holding too much cash? Ideally, you and your financial advisor are taking an annual inventory of all of your investments across retirement and non-retirement accounts: your 401(k)s, IRAs, taxable accounts, real estate, and direct investments in alternatives.
What impact is my money making on the world? While you’re on the subject of your goals, ask your financial advisor to help you align your investments with your values, if you haven’t already. For example, maybe you’re a sustainability advocate and don’t want to invest in big oil anymore. Or maybe you want to shift more of your investment portfolio into an industry or cause you care about — that’s something your advisor can help with. (We here at Ellevest have a particular love for impact investing.)
Do I have any life milestones coming up that will impact my investments? Got a new child, niece, nephew, or grandchild coming? It might be a good time to open a 529 plan. Or maybe your child or grandchild has reached the age at which they take control of an UTMA/UGMA custodial account you created for them. Or maybe you’ve turned 50, and you can start making catch-up contributions into tax-advantaged retirement plans. (If you’ve turned 72, you’ll probably have to start taking required minimum distributions from those retirement plans.)
How do you expect my investment portfolio to affect my taxes this year? Capital gains and losses can have a big effect on your tax bill. Whether they help or hurt, it’s good to be prepared for what’s coming. Depending on your situation, it could make sense to actively harvest (aka: sell) any securities at a loss. Your financial advisor can look over your investment portfolio and tell whether that strategy applies to you.
How much am I paying in fees? Hold your financial advisor accountable! Ask about advisory fees, fund fees (aka expense ratios), and advisor loads or commissions. This way you’ll have a better sense of whether your advisor is earning their fee.
5 questions to ask your accountant
How will this year’s proposed tax changes affect me? Every year there’s going to be some change, be it a bracket shift or a standard deduction update (or both, in 2023’s case). You’ll want to work with your accountant to ensure your money is set up to optimize for the upcoming year. If you’ve had any changes to your income, you might also ask your accountant what they recommend about things like IRA Roth conversions or deferred compensation.
Am I making the most of my charitable deductions? Your accountant should be able to help you to align your giving strategy and charitable contributions with your tax strategy. People often give cash to causes throughout the year, but depending on your situation, it might make more sense to give securities with embedded gains (instead of cash) and establish a formalized giving plan.
What (if any) changes might I make to my investment portfolio for tax reasons? Most bonds, for example, generate taxable income. It might save you money if you were hold tax-inefficient investments like this in a tax-deferred account, like an IRA.
What’s the best way to reduce taxes on my employer stock options? Shares like this (RSUs, ISO, non-qualified) can often have big tax consequences, so depending on the strategies your financial team is using, you might need to act before the end of the year to minimize them. Bring your accountant up to speed on your vesting schedule and ask for their help (where possible) to reduce your overall tax liability.
Do you do forensic accounting? If so, they might be in a unique position to spot red flags for shady stuff, like if your investments are being traded too frequently so that the broker can earn more in commissions (that’s illegal, btw). If your accountant offers this service, it's worth asking them to take a look.
4 questions to ask your estate attorney
Are my estate planning documents up to date? Ask your estate attorney for help in deciding who should manage your affairs if and when you can’t anymore. This may include your will, your health care directive(s), and power of attorney paperwork, among other things. The idea is to make things easier on your loved ones — the right person in the right role can make a big difference in an emergency. 35% of American adults say they’ve personally experienced family conflict, or know someone who has, because they didn’t have an estate plan in place.
Are all my beneficiaries up to date? Should something happen to you, it’ll also be easier on your loved ones if all your bank and investment accounts list the right person (or persons) as a beneficiary. Also ask if your accounts should include a transfer on death (TOD) or payable on death (POD) designation.
Should I be making any changes because of recent life events? New children or grandchildren, the death of a loved one, a new inheritance, and other changes that affect the people in your life and the amount of money in your estate can all affect your estate plan. Discuss who should be named as trustees, successor trustees, executors, beneficiaries, and agents of your accounts and entities. (One thing to call out specifically: divorce. Stories like this one show why an estate attorney can be especially valuable — being thorough is key.)
Should I title any of my assets into a trust? Ask your estate attorney for help understanding the probate process — they might recommend putting your assets into a trust instead. (Here’s some more info on what might go into that decision.)
Making changes to a financial or estate plan might require the help of more than one kind of advisor, especially with potential future changes in how wealth is legislated. Take the example of giving gifts to heirs. The lifetime gift exemption is slated to be cut in half starting in 2026, at which point; it could make a big difference on your taxes. A financial advisor can help you decide whether giving money to your heirs will fit with your financial plan. Then, an accountant can offer advice on the best way to give those gifts. And an estate attorney can tell you whether any of your existing estate plans need to be adjusted accordingly.
Ideally, your wealth management team should be working together to keep things running smoothly, but if that’s not happening, you might consider asking if that’s something they do at their firm. (And if not? Hmmm.)
Consider these questions a good starting place — having a list of all your talking points can help you feel more prepared going in, more confident in your decision-making, and more informed coming out. Let us know how the checkup goes.
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