Mid-Year Financial Reviews for Advisers and Clients

This year has been anything but normal. Advisers need to adapt their mid-year reviews to reflect the unexpected.
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As we’ve reached the summer of 2020, it's time for many financial advisers to meet with their clients for a mid-year review. Normally, these meetings are to review how the client’s investments have performed and to discuss various financial issues that pertain to that client’s situation. So far, 2020 has been anything but a normal year. Here are a few thoughts on what to stress this year.

We’ve Planned for the Unexpected

Ideally you can say to your clients that while the markets and the economy have been disrupted quite a bit so far in 2020, even extreme situations like this are part of what you’ve planned for. Likely the mid-year review meeting won’t be the first time you’ve had this discussion with clients, but it’s still a good thing to reinforce this with them in a more formal meeting situation.

Even with the planning you’ve done for your clients, there are discussion items for this review session.

How has the Situation Changed?

The economic and stock market impact of the COVID-19 pandemic may have had an impact on your client’s situation. Some examples of significant changes arising out of the environment so far in 2020 might include the loss of a job or being furloughed at least temporarily. Some companies may try to reduce staffing levels via the use of a buyout offer to some employees. If your client is one of them, this could be a major life change and could require an adjustment to some of the planning you’ve done for them.

For business owner clients, this might include the need to shut down their business or at least reduce operations. They may have taken a PPP loan to help get them through this challenging period.

Some clients may have seen their company eliminate 401(k) matches. Some may even have gotten ill themselves due to contracting the virus.

Any of these or countless other situations could impact the long-term financial planning and investment guidance that you have given your client. Depending upon the nature and severity of the impact on this situational change, this might prompt the need to rework some of this planning to adjust for these changes.

Investment Review

An investment review is undoubtedly a key part of any client review session you hold. This year so far we’ve seen drastic moves to the downside, followed by a nice recovery in the stock market. You’ve certainly been in touch with your clients periodically to suggest any interim moves or just to calm the nerves of some clients.

This review session is a good time to address any rebalancing issues in their portfolio, as well as to suggest any changes to the client’s holdings. The latter may arise out of your ongoing review of all investment vehicles that you use in client portfolios.

Estate Planning

For many of your clients, the COVID-19 pandemic may have awakened thoughts of their own mortality. Ensure that your clients’ estate planning documents, beneficiary designations and their overall plans to transfer their wealth to their heirs are current.

Planning so that a spouse, children or other heirs receive their assets as they intend is important to your clients. Clients who have done estate planning want to be sure they have things in order and that everything is correct, and that their planning reflects their current desires and situation.

For those clients who have not done any estate planning this is a great time to discuss this issue and its importance with them.

Financial Plan Review

While you certainly do this with your clients periodically, your mid-year review this year is a good time for a full review of your client’s financial plan. How are they tracking towards their financial goals? Has anything changed in the wake of COVID-19 and the accompanying economic and stock market turbulence? This is an opportune time to make any needed adjustments in your client’s financial planning strategies to ensure they stay on track towards their goals.

The SECURE Act and the CARES Act

The SECURE Act passed at the end of 2020 included a number of changes that could impact some of your clients going forward. The CARES Act passed in the wake of the COVID-19 offered relief to individuals in a number of areas as well, including the ability to both waive requirement minimum distributions for 2020 and to undo RMDs already taken in some cases.

Your mid-year review is a great time to review how and if any of the provisions in these acts impact your clients and if any changes need to be made to take advantage of those provisions.

Periodic client reviews are always an important communication tool between clients and their advisers. With all that’s gone on so far in 2020, these reviews are even more important.