Crafting Your Investment Portfolio: 5 Questions to Ask Your Wealth Advisor

"An ounce of prevention is worth a pound of cure" is a classic adage about the importance of seeing your doctor annually. The same concept applies to your financial health. It's important to take the time to meet with your Wealth Advisor every year to review your financial plan to ensure you are on track.

Your financial plan is more than just your investments. It's a strategic deep dive into your financial well-being and future goals. By focusing on these key questions, you create the opportunity to align your financial plan with your life's aspirations.

1. Am I on track to meet my goals?

When you first started working with a Wealth Advisor, you probably identified several financial goals, such as buying a house, sending a child to college or saving for retirement. Ask if you're still on track to meet these goals. And if anything has changed, make sure you're communicating this to your advisor so they can advise on potential adjustments to meet your new goals.

2. Is my portfolio well-positioned in the current market environment?

When markets are volatile, it can be tempting to retreat from the market or opt for a more conservative portfolio. However, an overly conservative portfolio could result in lower long-term returns and can be risky even if you're in, or close to, retirement because inflation erodes purchasing power over time. An advisor can help identify a well-diversified mix of investments appropriate for your situation and risk tolerance that can position your portfolio for long-term growth. As the market changes, your advisor will continue to monitor your portfolio and may propose rebalancing as needed.

3. Am I prepared to handle unexpected events?

Life circumstances, such as job loss, divorce or illness are just some of the unexpected events that can throw a financial plan off track. An advisor can help develop contingency plans for situations that could put your family's financial future at risk.

For scenarios that would significantly change your income, an advisor can help determine how much cash should be available in an emergency fund.

4. Am I maximizing tax savings and other tax-smart strategies?

Capital gains and losses can have a big effect on your tax bill. Whether they help or hurt, it's good to be prepared for what's coming. Depending on your situation, it could make sense to consider tax-loss harvesting. With tax-loss harvesting, you may choose to sell some investments at a loss, then use those losses to offset capital gains or other taxable income. Your Wealth Advisor can review your investment portfolio and tell whether that strategy applies to you. Additionally, it's essential to consult with a qualified tax professional to ensure all tax implications are carefully considered and properly managed.

Conversely, if you have assets that have significantly increased in value, an advisor may be able to suggest strategies to help reduce capital gains, such as charitable gifting.

5. What will my legacy look like?

After years of hard work and dedication, building a legacy you can pass along may be one of your top priorities. You may be thinking how you'll share the fruits of your labor with your loved ones, your community and the causes close to your heart. An advisor can help you explore legacy and estate planning, considering your full financial picture.

Life is filled with changes, and your financial plan will need to evolve too. Meet with a Wealth Advisor on a regular basis. And when you have a significant life change, make sure you're working with your Wealth Advisor to update your financial plan, so it reflects your family's current needs and goals.

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