Is It Time For A Mid-Year Financial Review?

Americans got serious about their finances during the pandemic. According to a new research study released in May, 32% say their financial discipline improved during the pandemic, and 95% expect their newfound habits will stick going forward. Almost one out of five (17%) US adults aged 18+ say they didn’t have a financial plan before the health crisis began. Overall, 83% say they were prompted to either create, revisit, or adjust their financial plan over the past 16 months.

As the world begins to reopen after more than a year of pandemic-related restrictions, it may be time to adjust your planning, once again, to reflect the changes that are bound to take place in your life in the weeks and months ahead. Maybe you’re finally taking that long-planned trip, considering a job or career change, buying or selling a home, getting that delayed wedding back on track, or simply resuming a more active social schedule.

Whether subtle or dramatic, lifestyle changes can impact your finances in various ways from your saving and spending patterns to your income-to-debt ratio, tax exposure, and more. That’s where reviewing your financial plan can be critical for keeping you on track toward your existing goals and any new priorities you may have recently established.

Summer can be an optimal time to engage with your financial advisor for a mid-year financial review. It’s far enough into the year to gauge how your plans are tracking, but early enough to make any needed adjustments. A mid-year financial review can be especially helpful for:

• Reassessing your spending and savings needs
• Reaffirming your financial goals and priorities
• Assessing your tax exposure
• Ensuring your investment portfolio is aligned with your time frame and risk tolerance

How to get the most out of your mid-year financial review

A productive financial review begins with clear communication. Consider the five steps below to get the most out of your mid-year review:

1. Review prior actions steps.

Prior to meeting with your advisor, take a few minutes to review the takeaways or action steps documented in your last meeting. Have you and your advisor both delivered on the items you committed to in a timely manner? A strong client-advisor relationship relies on open and honest communication. If either party is not delivering on agreed-upon commitments, make a point to discuss why. If the relationship is not a good fit for one or both of you, it may be time to move on.

2. List any changes that have taken place since your last meeting.

Have you experienced a change in your job, income, or marital status? Did you refinance your mortgage or take out a personal loan? Have you welcomed a new child or grandchild? What about your health? If you’re still working, has your retirement timeline changed? If you’re retired, have any of your plans or goals changed? Documenting this information will help to ensure you don’t forget to mention something that could impact your strategy going forward.

3. Document any concerns you have.

Are you concerned about the direction of the financial markets or economy? Are you worried about the prospect for rising taxes and inflation, or what will happen if you encounter a large, unplanned expense? Are you comfortable with your current savings and spending plans? It’s important to share these feelings and concerns with your advisor so you can work together to make any necessary changes or adjustments to your strategy.

4. Think about the future.

Do you or your spouse anticipate any changes in your employment situation, such as a promotion or job change in the months ahead? What about lifestyle expenses? Do you plan to move, make home renovations, purchase a new car or boat, or take a big trip? Have any of your goals changed, such as when or where you plan to retire? Remember, changes in your individual goals can impact your overall planning and timeline, including how soon you may be able to retire with the income your need.

5. Write down your questions.

Writing your questions down ahead of time helps to make sure you won’t forget to ask about things that are important to you during your review meeting.

Keep in mind that your advisor is there to help and advise you, not judge you. If you’ve found it hard to save more for retirement or build emergency savings, ask your advisor about ways to help you stay on track. If you’re not happy with the service you’re receiving from your advisor, such as the frequency of meetings or communication, this is the time to speak up and share your concerns. Remember, your advisor can’t take steps to improve the service you receive if they’re not aware of your dissatisfaction.

Finally, if you feel your needs are still not being met and you choose to end the relationship, be honest about why. There are many reasons why the relationship may not be a good fit, from personality issues, to fees, frequency of communication, conflicts of interest, etc. However, a good advisor will understand your concerns, and if they are unable to accommodate your needs, may be able to refer you to another advisor or firm that may be a better fit for you.

If you’re not sure how much value you’re receiving from your advisor, download our complimentary guide: 10 Questions to Determine if Your Advisor Meets Standards.