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Why Annual Financial Checkups Are Important

Olivia Stacey, CFA
Aug 3, 2021

Why Annual Financial Checkups Are ImportantThe last year has been a life-altering one. For me, for you, for everyone on this planet. We’ve all undergone some significant adjustments, and while I hope that the coming years will be less eventful in certain ways, I know that every year brings changes, whether unexpected or planned for. Life happens fast and the older I get the more real that statement becomes. We’re often so busy living our lives, we forget to stop, look around, and take stock of where we are, where we’ve been, and where we’re going.

For example, in the last year, aside from living through my first global pandemic, I have moved states, transitioned to a new role at ECM, bought a house, and my employer made changes to our retirement savings plan. You know who is really interested in hearing about all these changes, even the last one? My financial planner. Luckily for me, she lives inside my head, but for most people their financial planner is a phone call, email, or office visit away.

More Than Just Peace of Mind

Picking up the phone and calling your advisor may seem like just another item on your to-do list, but considering the importance of financial well-being, I would argue that the task deserves to move closer to the top of that dreaded list. If you’ll allow me to reframe things a bit, I think you’ll see the hidden value in the situation. The reality is that once you offload that new information onto your planner, they take the financial worry on for you. They’ll factor that info into your plan and tell you any adjustments that need to be made on your end or their end to ensure that your plan stays solid. They’ll likely even address some effects that you hadn't considered.

I bet more than one person reading this has undergone a significant change recently, a change that impacts their financial life, and they haven’t updated their financial advisor. Like I said, life happens fast, and as much as I want to believe that clients hold us advisors near and dear to their hearts, I recognize that we’re the last people you’re going to call when you get a big promotion. Which is why we stress the importance of annual meetings. Where we can sit down and help guide you through any adjustments that need to be made to stay on track.

Boring Years Also Bring Change

Conversely, while the last year has been quite an eventful one, for most of us, many years can be quite the opposite. It’s not uncommon at different times in life to look back over the last few years and feel like nothing has meaningfully changed. That doesn’t mean that adjustments shouldn’t still be made to your financial plan. You might not realize that some consequential changes have occurred without any noticeable outcomes. Every year we each inch closer to retirement, laws affecting taxes are always changing, and the financial markets rarely have an uneventful year. These are a few examples that may not have an impact on your day-to-day life, but certainly influence your financial plan.

Realistically, aiming to meet with your financial advisor once a year should get the job done. I meet with mine every moment of every day. You certainly don’t want a planner who’s so intrusive, but you do want someone who is going to encourage you to sit down once every 365 days. You can update them on your life, and they can suggest changes to ensure your plan stays sound through the stirring, and the dull years.

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Olivia Stacey, CFA is an Investment Advisor at Exchange Capital Managementa fee-only, fiduciary financial planning firm. The opinions expressed in this article are her own.