Why end of year planning should start now

By Brandon Wellman

One of the best ways to ensure your clients are confident in the new year is to take stock of their financial health. Year-end checkups serve as a checkpoint in client’s progress toward their goals and highlight their financial plan’s strengths and opportunities.

By moving the timeline to meet earlier in the fourth quarter of the year, advisors can make a lasting impact on financial plans by identifying life changes that alter insurance needs before the rush of the holiday season.

Start early

While “End of Year” is in the name, I prefer to begin check-ins around October/November. By that time, we have a good sense of what income looked like for the year and other tax implications months before filing. Planning this early empowers clients to make smart financial moves before the end of the year. More than that, it even provides the chance to do a wellness check: are the tools in place serving their needs as expected? Or have their needs shifted?

Considerations for retired clients

For your clients acting on their retirement plan, use this meeting as an opportunity to address how required minimum distributions (RMDs) play a part in their savings plan. Are their current withdrawals meeting their daily needs?

Or the opposite – are their savings on track, and they instead need to review the RMDs of their retirement programs? Use this as an opportunity to also describe what an RMD is and why it matters to their specific situation.

Another aspect of the financial plan that could require extra attention is their insurance coverage. Retirees are often already secure in their policies, but it is crucial to review any life changes that alter their ideal coverage. This could be adding additional coverage to protect certain assets, leave additional funds for heirs or if they no longer need their full coverage portfolio. Whatever the client’s status, I recommend using this checkpoint to determine the ideal strategy for the next year.

Considerations for young clients

Clients who are early in their career or are in the throes of family life can use the end-of-year meeting to evaluate how their savings are performing and adjust contributions. Upon review, the client may feel they need to reduce contributions to meet rising costs of living or they may want to maximize their contributions to stimulate further growth. Take this opportunity to review their income streams and guide them to the best decision. At times, this means revisiting their goals to better fit life changes like buying a new home, having a child or pursuing marriage.

Similarly, take these life changes into consideration when tailoring insurance coverage to meet your client’s unique needs. It is important to remember that needs shift as lifestyles change – someone in their 30s will have a different insurance portfolio than a client in retirement.

Use this opportunity to identify any potential gaps in their insurance coverage or if a policy is no longer aligned with their needs. Setting the expectations for the year ahead empowers clients to take control of their finances and position you as their trusted partner in their financial future.

Remember the 'why'

Keep in mind that you are the expert. Your client may not be considering their insurance portfolio, thinking of their policies as more of a set it and forget it tool, but do not hesitate to call out when you see a need to alter their insurance coverage. I often say something like, “This policy has served the purpose it was intended for, but you’ve had some big changes that warrant us looking at this coverage to make sure it still makes sense for your situation.

My job is to make sure you always have the correct amount of coverage.” This line helps to remind them that the goal is not to sell more insurance but to ensure they are protected against any potential threats to their financial future. With the key intention of the conversation continuing to build a comprehensive plan, clients are often open to recommendations when told how the change in coverage benefits their financial safety.

A financial plan is strengthened by an advisor’s ability to understand the needs of their client, especially as their lives evolve. The holidays will be much more enjoyable for them when they have confidence in their finances right as the clock strikes midnight on the new year.

Scheduling end-of-year meetings that don’t happen at the very end of the year and reviewing the client’s retirement savings schedule and insurance coverage needs will not only bring peace of mind but also instill further trust in your partnership as their trusted advisor.

About the Author
Brandon Wellman, CFP, RICP is an experienced financial advisor at Prudential and a 7-year MDRT member, with the Top of the Table distinction. He specializes in comprehensive financial planning, including retirement, estate planning, investing and more.