By Harris Private Bank, Special for US Daily Review.
With New Year’s Day already feeling like a distant memory, wise investors should make a resolution to ask the right questions about their estate and wealth management strategy. If the stock market is making your knees weak, or if news about the European Union is making you lose sleep, knowledge and professional guidance could be the key to maintaining your peace of mind and your wealth in 2012.
“There are at least a dozen questions that investors should be asking about their estate and wealth management strategy in 2012,” noted Peter Glidden, Washington Regional President, Harris Private Bank, a part of BMO Financial Group. “So, along with a better diet and more exercise, make it a priority to ask the following questions and meet with your wealth advisor to work together to be sure that you are on track to meet your financial goals. If you know the right questions to ask, and if your financial goals are in writing, you can feel more confident about your portfolio and your future.”
- Do you have an estate plan – or comprehensive financial plan in place? If so, when was the last time you reviewed it?If you don’t have a written estate plan, let 2012 be the year to do so –there are important estate tax laws that will be changing at the end of 2012 that you may benefit from. And make certain that copies are sent to your heirs, your attorney, your wealth advisor and your accountant. You should review your financial plan at least once a year.
- How well does your wealth advisor know you? Could he/she verbalize your goals for investing? Is he/she your advocate as well as your advisor? If you’re not sure that your portfolio manager or wealth advisor knows your goals for the future, ask them to verbalize them at your next meeting. If you are not pleased with the outcome, send your goals to him or her in writing and repeat the exercise at your next meeting. Your wealth advisor represents you to all members of your team; therefore, you need to be confident that your financial goals are clearly understood.
- Are your documents and trusts titled correctly to maximize tax strategies? Ask your wealth advisor, your attorney and your accountant to review your financial documents to leverage your tax strategy and maximize wealth preservation.
- Are your investment goals in writing? If, for example, your plan is to award your grandchildren a specific amount from your estate, make certain that goal is in writing and reviewed with everyone on your estate planning team. That way, investments will be recommended and ultimately awarded in keeping with your goals.
- What is your tolerance level for risk? Most of us understand that there is risk involved with investing, but with what level of risk are you comfortable? Make certain your portfolio manager knows your tolerance level for risk by discussing a tangible dollar amount. Your wealth advisor should communicate with you about what level of volatility could cause a loss of your standard of living or put future plans or goals in jeopardy. If anything seems too intangible from your perspective, put it in writing.
- Do you know what your core investments are and if there is potential for protected growth? Penalties? Especially with today’s volatile markets, it’s a good idea to monitor your investments on a regular basis so that you can proactively make adjustments to your strategy. It’s also wise to know the penalty fee for doing so.
- Is your wealth advisor working in an environment that mirrors your integrity? If your instincts tell you that your wealth advisor is trying to sell you products that aren’t in keeping with your investment goals, pay close attention. You are probably right: Your best interest isn’t being served. Also, does your financial institution contribute to your community? Do they serve on boards of organizations that you deem worthy? Would you recommend your wealth advisor to your closest family members and friends?
- What questions do you have about your wealth that you haven’t asked? If you are concerned about wealth preservation because of a family history of longevity, or if you need clarification on an abstract clause in an annuity, put them in writing and send those to your wealth advisor. The more specific you can be with those who manage your estate, the better served you will be.
- Are your adult children included in meetings with your wealth advisor and are they part of the decision-making process? If your children will be the ultimate beneficiaries of your estate plan, and if you have a good relationship with them, it is advantageous to have them actively involved in certain aspects of the decision making process. By doing so, there is the potential to reduce any conflicts that could arise in the future and keep harmony among your children.
The more you can communicate together, the less conflict there will be when the time comes to make decisions on your care and ultimately, to distribute your estate to your children and heirs. This is often a very uncomfortable topic for families, and you might welcome the opportunity for your wealth advisor to communicate your goals directly to family members, with or without you being present.
- Do you feel that your wealth advisor does the right thing for your portfolio and communicates its status to you on a consistent basis? Do you hear from him/her or do you have to call them? Do you receive newsletters and personalized investment reports frequently enough? On days when the stock market is heavily impacted, are you the type of investor that needs to have a phone call from your portfolio manager to calm your concerns—or are you the type of investor who believes that no news is good news?
- Do you have your assets invested with more than one investment advisor? If so, who is reviewing your overall investment portfolio? It is critically important that when you are using more than one advisor someone has the responsibility of reviewing the overall combined portfolio. This can help identify any significant overlaps, gaps or duplicate fees but most importantly insure that your overall portfolio is consistent with your goals, objectives & risk tolerance.
- Have you considered the evaluation of your assets in relation to all of your wealth, including art, collectibles, etc?Make sure you have photography, appraisals, insurance certifications and written goals for the distribution of all of your assets, including jewelry, art, family heirlooms and your most prized possessions. And let 2012 be the year to get your financial plans on track.