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Ask Your Advisor These 8 Questions During Your Annual Review

An annual review with a financial advisor helps you understand the role that financial advisors play in the management of your finances. By conducting a review, you can identify how you can leverage the expertise of your advisor to your advantage. However, it is important to do your due diligence when it comes to your finances and must follow up from your end to ensure that your financial goals are financially aware to be able to ask the right questions to your advisor. To understand what you can do to ensure that you attain your financial goals and targets, consult with a professional financial advisor who can advise you on the same.

To understand your advisor better, you can consider asking them some questions during an annual review. Doing so would not allow you to set the right expectations but also help you improve communication between yourself and your advisor. This would be beneficial in ensuring that the expectations of both parties are met and no one feels neglected or let down by the terms of the arrangement.

Let us discuss some questions that you can ask your financial advisor during the annual review:


1. How did my investments perform this year?

The first thing that you need to focus on when conducting an annual review with your financial advisor is how your investments have performed over the past year and the kind of progress that has been made. The start of the year is an excellent time to review your past financial goals and set new ones for the coming year. In addition, you may categorize your investments in terms of different goals. For example, for retirement planning, you can earmark your 401(k) retirement account for achieving that goal; an Individual Retirement Account (IRA) on the other hand, can be used for both saving for retirement and education planning. If you are investing money in an equity mutual fund, you can use the proceeds to pay for a down payment for purchasing a home.

Once you have created a list comprising your different goals and investments, discuss them with your advisor and go through each goal to check whether you are on track to achieving it or not. For example, suppose you wish to save a certain amount of sum for retirement by the age of 60, check the current balance of your 401(k) and find out the status. If you are not on track to attaining your savings target, seek counsel from your financial advisor on what steps you can take to reach your goal within the set timeline.

2. What is my present net worth?

The next question in the financial advisor annual review checklist that you should ask is concerning your net worth. Have you made any financial progress? Tracking the present value of your investments can help you gauge your current financial standing. Ask your advisor about the value of all your assets (such as bank savings accounts, gold, investments, emergency funds, retirement accounts, emergency funds, real estate holdings, etc.) and liabilities (like mortgage, credit card debt, loans, mortgages, etc.). This goes without saying that your assets should outstrip your liabilities for you to be in a good financial state. You can compare your present net worth with what you had a year ago to evaluate your financial progress. Doing so would allow you to assess how helpful your financial advisor has been or not. If you think your advisor hasn’t been up to scratch, you can relieve him of his services and hire someone new. That said, you must ask your advisor how he can help you increase your net worth.

3. What changes can I make to positively impact my future financial goals?

During your annual review with your financial advisor, you must inform them about any new major life events that have occurred in your life. This would enable them to map out your financial responsibilities and future financial liabilities. Events such as switching jobs or careers, or quitting your job to start a business can impact your financial plan and require modifications. If your heart is set on starting a business, you would need lump sum capital to finance the move. This can be done either through liquidation of some of your assets or taking out a loan. These changes must be accounted for in your financial plan.

In addition, if some change has occurred in your personal life, such as getting married, it may require you to combine your assets and liabilities with your spouse. This can either be a blessing or a curse depending on how good or bad your spouse is with managing money. This is where your advisor can step in and help you understand the financial implications of getting married and advise you on any changes that you may need to make. You may also need to modify your plan at the time of getting a divorce, having children, losing a spouse or a child, etc. Having dependents may require you to invest more to secure their financial future and increase your investments. Similarly, if you have either gotten divorced or widowed, you may have to reevaluate your financial needs as you no longer have to contend with your spouse and their needs.

4. What is the status of my debt? Is it under control?

It is tricky to manage debt and keep it under control. To do so, you need to cut your expenses and pay off your loans as soon as you can. If you do not tackle your high-interest loans, they can negatively impact your investment returns and may even eat up your savings. Debt can severely affect the achievement of your financial goals and put you behind by several years. Hence, it is critical to manage debt to secure a  healthy financial future. It is also the primary reason why debt management is an extremely critical question to ask your financial advisor during an annual review. You must also look to consolidate your high-interest loans so you can save money on paying interest. Consult with your financial advisor on potential investment options that can help you offset your debt interest payments with potential growth. Lastly, you can ask your advisor to create a budget for you to manage your debt (if it has gotten out of control).

5. How should I prepare for financial emergencies?

Emergencies come unannounced which is why it is critical that you have sufficient funds in liquid accounts or maintain an emergency fund to take care of your immediate and future financial needs. Doing so would ensure that your loved ones do not suffer financially or mentally and it is something that must be discussed at length during your annual review with your financial advisor. A large number of people have long-term investments that attract penalties if funds are withdrawn before a specific date. You could also keep your money in a savings account in a bank but that will not generate enough returns to offset inflation. Your financial advisor can help you identify investments that offer long-term growth as well as short-term liquidity. Moreover, ask your advisor about the different rules of your investment accounts with respect to guidelines related to withdrawals, their liquidity, the scope of growth, etc.

6. Is my estate plan exhaustive and does it reflect my current financial requirements?

Your estate plan should at all times be updated and must reflect any changes that may have occurred in your personal relationships recently. This is critical as it helps to avoid confusion at a later point in time. For instance, suppose you married again during the last year and would like to update your will and make your current spouse the beneficiary of your will. This helps secure the future of your current spouse. Ensure that these changes are reflected on all your other accounts too. You could also set up a trust for your children and place certain conditions with respect to access and usage of funds held in the trust. Do consider discussing your estate plan with your financial advisor during your annual review to ensure that it is up to date.

7. Should I invest in a healthcare and long-term care plan?

As revealed by many studies, retirees spend a major chunk of their retirement funds on healthcare expenses. Due to a rise in illnesses and medical inflation, you must ensure that you have sufficient savings to take care of your healthcare expenses. If you have bought health insurance cover, make sure that the plan is ideal for your age and gender. Your advisor can also suggest a suitable plan if you need to upgrade your health cover. Also, discuss long-term care insurance to ensure you can afford medicare care in old age. You can also inquire about Medicare and at what age you should sign up for it. You can consider opening a Health savings account (HSA) too. It is a tax-advantaged account that can be used to save tax and take care of any health care expenses you may incur in retirement.

8. What is my annual tax output?

As an individual, you may have to shell out different kinds of taxes such as income tax, inheritance tax, estate tax, capital gains tax, etc. Ensure that you understand how each tax is levied and calculated along with its impact on your tax liabilities. Doing so would not only allow you to plan your withdrawals from investment accounts better but also enable you to reduce your tax liability, especially if you are a high-income earner. This can be done in several ways such as:

  • Deploying tax-loss harvesting wherein if you have suffered any losses, you can offset those losses against your capital gains.
  • Your advisor may suggest that you switch to a traditional IRA or a 401(k) to delay paying taxes in the future. You could also shift to a Roth IRA or Roth 401(k) if you expect to be in a higher tax bracket in retirement.
  • You can donate money to a charity to lower your tax output and claim a tax rebate on it.


Discuss the above tax-saving strategies with your financial advisor, their pros and cons, and accordingly make a decision.

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What other points should you discuss during your financial advisor review?

Apart from asking questions about your investment portfolio, goals, and needs, you can also inquire about the following:

1. What services are included in your fee?

If you are unsure of what all services your advisor is offering in exchange for the fee paid by you, you can discuss the same during the annual financial advisor review. If you have neglected to make use of those services or were unaware about them, you can make use of them now. You can further talk about the advisor’s role and how he would help you achieve your goals and needs.

2. How many clients do you currently manage?

It is advised that you inquire about the number and kind of clients your financial advisor is managing. This gives you a fair idea about their experience and expertise along with how proficient they are in managing your finances.

3. Are there any concerns you have about my investment portfolio?

Ask your advisor if they have any concerns that he would like to discuss with you. Clients can sometimes be guilty of miscommunication, not following up, lack of interest, procrastination, etc. Try and find a solution so that you are able to clear up any misunderstandings.

To conclude

By conducting reviews of financial advisors, not only can you keep track of your portfolio’s performance but also identify any potential issues so that you may take preventive action. Doing so also allows the advisor to understand your needs better and helps improve communication. Understand that annual reviews are a critical part of helping you improve your finances and an important step in ensuring you amass sufficient savings for retirement. Hence, create a list of important questions beforehand to clear your doubts. This would also ensure that you receive better assistance and faster growth since the advisor would be better prepared to understand your financial needs and goals.

Lastly, if you feel that you may need to find a different financial advisor after the review, you can always engage the services of a new financial advisor. Use the free advisor match service to search for fiduciary advisors near you. Based on your requirements, the tool will connect you with 1-3 financial advisors that are best suited to meet your financial needs.

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The blog articles on this website are provided for general educational and informational purposes only, and no content included is intended to be used as financial or legal advice.
A professional financial advisor should be consulted prior to making any investment decisions. Each person's financial situation is unique, and your advisor would be able to provide you with the financial information and advice related to your financial situation.