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4 Questions to Ask Your Financial Advisor At Your Annual Review

questions to ask financial advisor during annual review

As the end of the year approaches, now is an excellent time for you to schedule a meeting with your financial advisor. An annual review of your financial situation is an ideal reason to come together.

Not only can you review the financial progress that you made during the year. Your annual review meeting also provides the opportunity to go over your investment portfolio, insurance coverage, and overall financial plan. It’s a crucial moment to see whether any changes are needed, especially if your circumstances have changed somehow.

Of course, money matters and retirement are a moving target. So, you can also set new goals and update your estate plan if necessary.

All of that being said, if you do have a meeting on the books, you might be unsure of the “ballpark” questions to ask your advisor during your financial review. Below are four questions to help guide your discussion and make the most of your annual review meeting time.

Questions to Ask Your Advisor During Financial Review

At a minimum, ask these four questions to your financial advisor in your annual review:

1. What can I do to reduce my tax burden, both for myself and my heirs?

If unplanned for, taxes can take a chunk out of a portfolio. In one study by Lincoln Financial, nearly one-third of all income earned by high-income retired households was paid toward taxes.

Another study by Nationwide Retirement Institute found that many retirees have larger-than-expected tax burdens. Nearly half of retirees in that survey wished they had planned better for taxes in their retirement. One in 4 retirees mentioned they were paying thousands more in taxes than they anticipated.

Make Your Retirement More Tax-Wise

Fortunately, there may be a number of things that you can do to reduce your taxes in retirement. Maybe you worry about future tax rates, particularly as political uncertainty and growing national debt weigh in. Then you can convert a portion of one of your traditional IRAs or retirement plans to a Roth account.

While that counts as an upfront cost for taxes, you might benefit from 'net savings' on reduced tax liability for your portfolio in the future. Ask your financial professional about this opportunity if it's of interest to you.

Leverage Tax Advantages with Portfolio Holdings

Also take a look at any losing holdings you have. If you sell them now and wait at least 31 days to buy them back, then you can take a tax deduction for the full amount of the loss if you have capital gains to net against it.

If not, then you can deduct up to $3,000 of losses against your ordinary income for that year. And the more money that you can put into Roth accounts, the less taxes your heirs will have to pay.

2. What can I do to further maximize the financial or charitable impact of my giving?

While the tax law reform of 2017 brought some relief, they also narrowed the window for charitable giving.

However, it's still possible to take a Qualified Charitable Distribution (QCD) from your traditional IRA or qualified plan. This is a distribution that goes directly to a qualifying charity without coming to you first.

These distributions can be advantageous for two reasons:

  • First, they aren't taxed like ordinary distributions up to the first $100,000 of QCDs.
  • Second, they may allow you to make a bigger donation as a result of this tax-free status.


Make sure that any charitable organizations that you are considering for QCDs will qualify.

Most people who have to take required minimum distributions from their qualified plans and accounts can convert them to QCDs. Thus, they can escape the tax bill that would normally come from these distributions. Ask your financial professional about QCDs, and other giving opportunities, that can cut your tax bill as well as help worthy causes.

3. What strategies can we set for emergency healthcare and/or long-term care services?

Being forewarned and proactive is to be forearmed. It's highly prudent to have complete strategies for future healthcare emergency needs and for long-term care needs before such situations actually arise.

Ask your financial advisor about your options. Among other possibilities, your strategy may call for insurance-based solutions. Many annuity and insurance carriers have specialized products that are built out in their design specifically for these needs.

Solutions That Can Help You Conserve Money

What is beneficial about these insurance contracts is their risk-pooling and risk sharing. The dollars you pay into your policy can have a multiplier effect when you need proceeds for qualifying long-term and healthcare needs.

This turns into cents-on-the-dollar in premiums paid for dollars of proceeds in benefits from the insurance company's general fund. In other words, you don't shoulder all the risk yourself. You can leverage the extensive assets of the insurance company for these situations -- and to help preserve your other hard-earned money.

Tax-Free Treatment for Long-Term Care Contracts

Some insurance contracts might pay out tax-free proceeds for qualifying long-term care and health situations under the provisions of the Pension Protection Act. A few of these selections are called asset based long-term care policies.

Ask your financial advisor about these opportunities. Be sure to ask about the pros and cons of alternative options like long-term care insurance, dedicated annuities with long-term care or confinement riders, and life insurance contracts with living benefits that can be accelerated for qualifying emergency health as well as long-term care situations.

Be mindful of the terms and conditions of any life or annuity contracts that you may be considering. Some annuity long-term care or confinement riders come with qualifiers.

They might pay out "enhanced" income only for a certain amount of years or until your money in the contract runs to zero. In many cases, the insurance company may provide you an exit for liquidity in your contract for qualifying terminal illnesses or other similar health conditions.

Check the contracts you are considering for details. Don't forget the other side of planning, including healthcare power of attorney and healthcare directives for your stated wishes in certain situations.

4. What survivorship strategies are there for retirement income for when my spouse or I outlive the other?

When a spouse passes away it's an emotional time. Life slows down. Daily life priorities take a back seat to grieving and to reorienting your affairs without that person.

It's also one of the worst times for a grieving spouse to figure out how they will cover the bills. They already are struggling with a new reality.

You can prepare for this by setting the stage ahead of time. What survivorship strategies do you have in place to make financial transitions, income and all, as painless as possible for the surviving spouse?

Don't Forget the Possibility of Declining Decision-Making Ability

Don't forget to account for the possibility of declining physical and cognitive abilities with aging. The survivor may not be in a position to make effective financial decisions -- or decisions in general -- for himself or herself.

So, your survivorship strategies should include provisions for how the surviving spouse will have ongoing dependable income streams as well as the right people to make decisions for them and their situation.

Make sure to include guards against the possibility of elder fraud in your strategies. Consult with an experienced attorney about your legal options in this arena.

Start the New Year Strong

While not an exhaustive list, these four questions are an excellent starting point for making the most of your annual review meeting.

You should be well-prepared for any curveballs that get thrown your way throughout the year. Being prepared is to be forearmed.

If, during the course of this annual financial checkup, you find yourself searching for a financial professional to help you with your goals -- or you just want another opinion of your current financial progress -- help is a click away at SafeMoney.com.

Use our "Find a Financial Professional" section to connect with someone directly and discuss your concerns. You can request an initial goal-setting appointment to review your situation and talk about ways to achieve your goals. If you need a personal referral, call us at 877.476.9723.

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