What to Expect at Your Next Portfolio Review

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By Mike Gertsema, Senior Wealth Advisor

What should a client expect during a portfolio review? It’s changed a great deal over time, and a typical portfolio review meeting now covers much more information than it used to.

Those meetings usually first cover what is on our client’s minds, such as:

  • Discussing the most memorable thing that has happened over the past 12 months.
  • What life decisions are you contemplating for the next 1, 5 and 10 years?
  • What are your goals for the meeting?
  • What specifically do you want to discuss?

Other items we like to discuss with clients include:

  • Updated financial plan numbers.
  • Client’s cash flow and cash reserves.
  • All financial goals.
  • Portfolio performance numbers, from year to date, one-year, previous calendar years and inception to date.

The next step in a portfolio review is to discuss what’s going on in the market and its outlook, and how it fits into your financial plan and investment strategy. We also:

  • Review the portfolio’s stress test, measuring its allocations, risk and expected return.
  • Review the investments in each portfolio, and how each investment fits into the financial plan for short-term (1 to 2 years), mid-term (3 to 5 years) and long-term (6 years and beyond) goals.
  • Review the previous year’s income tax returns and see how we did with last year’s strategies – seeing whether the client received a refund or owed taxes, and checking the withholdings on withdrawals and adjusting if required.
  • Upload the previous year’s income tax returns during the meeting and start planning the current year’s tax strategy. We are able to illustrate different options and tax strategies to help us choose the best option for the current year.

Once we’ve determined the tax strategy, we illustrate how it ties into the financial plan, taking into consideration the marginal income tax bracket, the average income tax rate, the capital gains tax rate, the financial effects of Social Security and the estate.

We project the financial plan to age 90 to determine the size of the estate and projected tax liability to heirs, and verify all beneficiaries. It’s also a good time to review the estate plan and confirm everything is up to date.

Finally, we review how every change within the financial plan affects other parts of the financial plan and emphasize how everything ties together.

Despite covering so much ground, a portfolio review with Gertsema Wealth Advisors takes only an hour. We’re able to provide so much information and value to our clients because of the knowledge and experience in our office, the resources from our partnership with Carson Group and the technology available today. We are focused on finding the most talented professionals and state-of-the-art technology to bring more value and information to our clients.

We know our clients need good information to make good decisions, and all the information provided in our meetings is presented digitally on a touchscreen so clients can verify that it’s current.

That brings me back to the original question: What should a client expect during a portfolio review? Just a few years ago, portfolio reviews were spent primarily on investments, the outlook of the market and performance tied to an index.

As I see it, a market index has little to do with a client or their financial goals – whether short-term or long-term. We all like to make money and not lose money, but what does that have to do with an index? And when we looked at income tax returns in the past, it was without tools to evaluate and project an income tax strategy.

Clients who have not reached retirement generally are wondering when – or even if – they can retire, and are concerned about Social Security benefits and their pension and 401(k) rollover options. They need illustrations on taking Social Security benefits in conjunction with Roth IRA conversions and other taxable income. They want personalized information to make good decisions that will affect them for the rest of their lives. They want good, unbiased advice from a fiduciary who puts their best interest first.

A financial plan used to be a one-time event, and was seldom reviewed or updated. Many times, it wound up in a notebook that sat on a shelf collecting dust. A portfolio review is meant to update the client on their plan, provide information and help develop strategies to enhance the client’s financial wellbeing.

It’s NOT a meeting to SELL investments and generate a commission. It’s also NOT a social meeting with clients to justify the fee the advisor is charging or to make an adjustment to justify their existence.

We want our clients to feel warm and welcome, but we also want them to feel informed. We want them to know they’re getting excellent service and valuable information to help enhance their future, including advising, investing, tax planning, risk management and estate planning.

Our mission is to empower our clients to make life’s decisions on their terms!

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