End-of-year financial checklist

Walk through these 5 questions with your clients before year’s end

The end of the year is a time to reflect, recharge, and relax. But it’s also a great opportunity for financial professionals to meet with their clients and go over their goals and whether there are any changes they may make heading into the new year. It’s also a good practice as a means of establishing and strengthening your relationship with your clients. Frank O’Connor, Vice President of Research at the Insured Retirement Institute, says it’s also a great way to demonstrate all you’ve accomplished as an advisor over the previous year and what the next year looks like.

“That year-end discussion is your opportunity to check in: are you on track, what are your concerns, and take a look at everything,” he says.

Of course, there are other, more specific things you can touch on with your clients as the year draws to a close. Here’s a closer look at five topics you may wish to discuss with your clients.

Portfolio construction

Is the era of the traditional 60/40 portfolio construction over? Some experts think so. Given the current environment of high inflation, rising interest rates, and market volatility, now may be an especially good time to have this discussion. Perhaps take this opportunity to talk through how your clients want to fund their retirement.

“This year in particular there are a lot of things on the table that an advisor can be talking to a client about,” O’Connor says. “There is an opportunity to make a shift in allocation depending on a client’s risk tolerance and time horizon. To the extent that there’s powder that’s being kept dry, how is that being deployed?"

Address any life changes

A lot can happen in a year, and that includes your clients’ wants, needs, and wishes. There are some common life changes that need addressing such as divorce or job loss, but according to O’Connor there are some less obvious ones that you should be sure to keep in mind when having a year-end talk with your clients.

“What’s going on with the parents and the kids? Are you caring for or do you envision caring for adult children or parents,” he says. “What kind of things do you have in place there?”

These can sometimes be sensitive topics of conversation, so O’Connor recommends entering into them with a softer touch by asking generally how their families are doing, and then maybe expanding the conversation from there.

Spend eligible flex dollars

Do your clients have a Flexible Spending Account (FSA)? They need to make sure they spend money by the deadline. This is especially important now — the IRS is implementing changes in 2023 to how much you can save in an FSA or Health Savings Account. The opportunity here may be to discuss and pursue this further with your client: what does their medical coverage look like and what do they have available to them.

“Does it make more sense to have more robust coverage with an FSA? Or should you look at a high deductible plan and then have an HSA, because with an HSA you have the triple tax benefit,” O’Connor says. “Ultimately those HSA dollars could become retirement dollars if they’re not spent, and you don’t lose them at the end of the year like you do with an FSA.”

A smart approach to charitable giving

This is largely client dependent — some are more charitable minded than others — but if it’s something that has a great deal of importance to certain clients, it’s a crucial topic of conversation when the year ends. For example, a charitable retainer trust using an annuity can be an effective way to transfer the dollars to the organizations they want to support.

An eye on the future

Nobody can predict what the future will bring, but that doesn’t mean you shouldn’t plan for the unexpected. Are we headed for a recession? Will we continue to see a volatile market in 2023? And how could changes to Social Security impact the way your clients live during retirement? It may be a good idea to talk about things on the horizon.

“It goes back to your goals analysis: what are your clients’ goals in the short, medium, and long term – and let’s look at how you’re allocated across your entire portfolio,” O’Connor notes. “Is what we have in place now still working? Or do these macro factors dictate that a change would be appropriate.”