As a financial advisor on Ellevest’s Private Wealth Management team, I love this time of year. There’s just something about the calendar’s first few months that gives the air a clean-slate feeling — and some inspo to get all of our you-know-what together.
Just like you (hopefully) go see your various doctors for annual wellness exams, now’s a good time to have a couple of annual “wealthness” exams with your team of advisors. Here are some key questions to bring with you.
6 questions to ask your financial advisor
Is my investment strategy still aligned with my goals? Have a conversation about your future life and money goals (especially if they’ve changed lately).
What is my money doing for the world? While you’re on the subject of your goals, ask your 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 — that’s something your financial advisor can help with. Or maybe you want to put more of your investment portfolio in an industry or cause you care about deeply. (We here at Ellevest have a particular love for impact investing.)
Is my investment portfolio properly allocated? This one’s especially important if you have assets in multiple places, which can make rebalancing tricky — you don’t want to accidentally find yourself too concentrated in any one asset class or individual investment.
Are there any life milestones coming up that will impact my investments? For example, if you’ve 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. (And if you’ve turned 70½, you’ll probably have to start taking required minimum distributions from those retirement plans.)
How do you expect my investments 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 know what’s coming.
How much am I paying in fees? Ask about advisory fees, fund fees, and advisor loads or commissions. Hold them accountable. Make sure they’re earning their fee.
5 questions to ask your accountant
Aside from “typical” tax documents like W-2s and 1099s, is there anything else you need to file my tax return? Maybe they haven’t gotten the paperwork they need from your financial advisor, for example.
Will the new tax law affect my deductions or credits? The 2017 Tax Cuts and Jobs Act made a lot of changes. Some deductions are no longer available, and some limits have been changed. If you’re losing deductions, see if there’s any new advice to help you save money. Here are a few of the 2018 changes that might affect you:
An increase to the alternative minimum tax exemption limits
An increase to the standard deduction
An increase to the amount you can give before you pay the gift tax (both for your lifetime and for single gifts)
A new tax deduction for business owners of pass-through entities
Am I making the most of my charitable deductions? See if your accountant can help you be more strategic with your giving and charitable contributions for tax purposes.
Are there any tax reasons to make changes to my investment portfolio? For example, most bonds generate income that’s taxable. It might save you money if you were to have tax-inefficient investments held in a tax-deferred account, like an IRA.
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). It's worth an ask about whether your accountant could take a look.
4 questions to ask your estate attorney
Are all my beneficiaries up to date? Should something happen to you, it will be easier on your loved ones if all your bank and investment accounts list the right person as a beneficiary. Also ask if your accounts should include a transfer on death (TOD) or payable on death (POD) designation.
Are my health care directive and power of attorney documents up to date? Ask your estate attorney for help in deciding who should manage your affairs if you can’t anymore. Again, this is to make things easier on your loved ones — the right person in the right role can make a big difference.
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 I’d call out specifically: divorce. Stories like this one show why the help of 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, and see if they 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 advisor. Take the example of giving gifts to heirs. The new (doubled) lifetime gift exclusion has the potential to make a big difference when it comes to taxes. So having a team of advisors help navigate that complexity might be really helpful. First, a financial planner can give advice on whether giving money to heirs fits with a financial plan. Then an accountant can give advice on the best way to give those gifts. After that, an estate attorney can give advice on whether an existing estate plan needs to be adjusted.
Ideally, your advisors 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.)
These questions are a good starting place — having a list of talking points can help you feel more prepared going in and more informed coming out. Let us know how the check-up goes.
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You may or may not have noticed that we linked to forbes.com for information about tax cuts for new businesses. Forbes (“Solicitor”) serves as a solicitor for Ellevest, Inc. (“Ellevest”). Solicitor will receive compensation for referring you to Ellevest. Compensation to the Solicitor will be $20 per membership activated. You will not be charged any fee or incur any additional costs for being referred to Ellevest by the Solicitor. The Solicitor may promote and/or may advertise Ellevest’s investment adviser services. Ellevest and the Solicitor are not under common ownership or otherwise related entities.
You may or may not have noticed that we linked to https://www.investopedia.com/ for information about forensic accounting. FYI, Investopedia (“Solicitor”) serves as a solicitor for Ellevest, Inc. (“Ellevest”). Solicitor will receive compensation for referring you to Ellevest. Compensation to the Solicitor will be $10 per membership activated. You will not be charged any fee or incur any additional costs for being referred to Ellevest by the Solicitor. The Solicitor may promote and/or may advertise Ellevest’s investment adviser services. Ellevest and the Solicitor are not under common ownership or otherwise related entities.
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