6 questions to ask your financial advisor

1. Is my investment strategy still aligned with my financial goals? Great question for a financial advisor like me! But let’s back up a bit, because you need to answer this important one first: Have your financial goals (or life goals in general) changed since last year? For example, did you buy or sell a property? Change your retirement plans? Add a new addition to your home? Want a new addition to your home? (Yeah, you do). Things inevitably change — that’s OK.  Just make sure to give the update to your money pro so that your investment strategy takes all of your goals into consideration.

2. What impact is my money making on the world? While you’re on the subject of your goals, ask your financial advisor to help you use your financial power for good and align your investments with your values, if you haven’t already. For example, maybe you’re a sustainability advocate and don’t want to invest in big oil anymore. Or maybe you want to shift more of your investment portfolio into an industry or cause you care about — that’s something your advisor can help with. (We here at Ellevest have a particular love for impact investing.) 

3. Is my investment portfolio properly allocated? This one’s especially important if you have assets at different financial institutions. It can make rebalancing tricky — you don’t want to accidentally find yourself too concentrated in any one asset class or individual investment. Do you have more than 10% of your net worth in a single stock position? Are you holding too much cash? If so, how much should you keep in cash, and how much should you invest? Ideally, you and your financial advisor are taking an annual inventory of all of your investments across retirement and non-retirement accounts: your 401(k)s, IRAs, taxable accounts, real estate, and direct investments in alternatives.

4. Do I have any life milestones coming up that will impact my investments? New chapters — for you and your family — also mean new wealth management strategies to consider. Got a new child, niece, nephew, or grandchild coming? It might be a good time to open a 529 plan. Maybe your child or grandchild has reached the age at which they take control of an UTMA/UGMA custodial account you created for them. Or maybe you’ve turned 50, and you can start making catch-up contributions into tax-advantaged retirement plans. (If you’ve turned 72, you’ll probably have to start taking required minimum distributions from those retirement plans. Here’s more on retirement IRS limits.)

5. How do you expect my investment portfolio to affect my taxes this year? 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 actively tax loss harvest (aka: sell) some securities. Your financial advisor can look over your investment portfolio and tell whether that strategy applies to you.

6. How much am I paying in fees? Hold your financial advisor accountable! Ask about advisory fees, fund fees (aka expense ratios), advisor loads or commissions, and other investment fees. This way you’ll have a better sense of whether your advisor is earning their fee.

5 questions to ask your accountant

1. How will this year’s proposed tax changes affect me? Every year there’s going to be some change, be it a bracket shift or a standard deduction update (or both). You’ll want to work with your accountant to ensure your money is set up to optimize for the upcoming year. If you’ve had any changes to your income, you might also ask your accountant what they recommend about things like IRA Roth conversions or deferred compensation.

2. Am I making the most of my charitable deductions? Your accountant should be able to help you to align your charitable giving strategy and charitable contributions with your tax strategy. People often give cash to causes throughout the year, but depending on your situation, it might make more sense to give securities with embedded gains (instead of cash) and establish a formalized giving plan.

3. What (if any) changes might I make to my investment portfolio for tax reasons? Most bonds, for example, generate taxable income. It might save you money if you were to hold tax-inefficient investments like this in a tax-deferred account, like an IRA.

4. What’s the best way to reduce taxes on my employer stock options? Shares like this (RSUs, ISO, non-qualified) can often have big tax consequences, so depending on the strategies your financial advisor and wealth management team are using, you might need to act before the end of the year to minimize them. Bring your accountant up to speed on your vesting schedule and ask for their help (where possible) to reduce your overall tax liability.

5. Do you do forensic accounting? Your accountant might have a pretty cool hidden talent: they might also use their skills to investigate financial records and accounts for shady stuff, like fraud or embezzlement. If so, they might be in a unique position to spot red flags for you, too. (Like if your investments are being traded too frequently so that the broker can earn more in commissions, which is illegal, btw). If your accountant offers this service, it's worth asking them to take a look.

4 questions to ask your estate attorney

1. Are my estate planning documents up to date? Ask your estate attorney for help in deciding who should manage your affairs if and when you can’t anymore. This may include your will, your health care directive(s), and power of attorney paperwork, among other things. The idea is to make things easier on your loved ones — the right person in the right role can make a big difference in an emergency. 35% of American adults say they’ve personally experienced family conflict, or know someone who has, because they didn’t have an estate plan in place.

2. Are all my beneficiaries up to date? Should something happen to you, it’ll also be easier on your loved ones if all your bank and investment accounts list the right person (or persons) as a beneficiary. Also ask if your accounts should include a transfer on death (TOD) or payable on death (POD) designation.

3. Should I be making any changes because of recent life events? New children or grandchildren, the death of a loved one, a new inheritance, and other changes that affect the people in your life (and the amount of money in your estate) can all affect your estate plan. Discuss who should be named as trustees, successor trustees, executors, beneficiaries, and agents of your accounts and entities. One thing to call out specifically: divorce. An estate attorney can be especially valuable when prepping for a divorce when wealth is involved. Being thorough is key.

4. Should I title any of my assets into a trust? Ask your estate attorney for help understanding the probate process — they might recommend putting your assets into a trust instead.

Making changes to a financial plan or estate plan might require the help of more than one kind of advisor, especially with potential future changes in how wealth is legislated. Take the example of giving gifts to heirs. The lifetime gift exemption is slated to be cut in half starting in 2026, at which point; it could make a big difference on your taxes. A financial advisor can help you decide whether giving money to your heirs will fit with your financial plan. Then, an accountant can offer advice on the best way to give those gifts. Finally, an estate attorney can tell you whether any of your existing estate plans need to be adjusted accordingly.

Ideally, your wealth management team should be working together to keep your financial health, well, healthy. If that’s not happening, you might consider asking how you all could get on the same page. If that’s something they don’t offer or aren’t willing to do? Hmmm. Then it might be a good reason to break up with them. 

Consider these questions a good starting place. Having a list of all your talking points can help you feel more prepared going in, more confident in your decision-making, and more informed coming out. Let us know how the annual checkup goes.

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Disclosures