Time for a Checkup: The Financial Plan Audit

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Even the best-laid plans need adjusting. This is certainly true in financial planning as life goals shift, new tax legislation and health care regulations are enacted, and economic conditions go up or down. By making a point to periodically perform a financial plan audit, you can stay on top of your clients’ personal changes—but you may need help keeping up-to-date with all the current events that could also affect the plans they have in place.

After all, the financial advisor “commandments” require that you (1) build some flexibility into financial plans, allowing for the possibility that something may go off track, and (2) are never afraid to create a better plan when the time comes.

In other words, to keep your clients moving toward their goals, accept that the road to get there could have a few swerves along the way, and adjust accordingly. To help lead the way, we have a few key areas to focus on as you check in with clients:

Accounting for the ever-changing tax code. The Tax Cuts and Jobs Act (TCJA) and the SECURE Act have upended tax planning for many—clients may need to reevaluate their situation to account for changes to tax brackets, deductions, and gifting limits. Small business owners may wish to revisit the business entity type they’ve chosen because of changes to the taxation of pass-through business income under the TCJA.

Updating the estate plan. The TCJA doubled the estate and gift tax exemption, which is now $11.58 million for individuals and $23.16 million for married couples. Family changes, new goals, and plans to benefit others may be different since the last time you spoke with your clients. With a new administration taking the reins, even more changes may be coming our way.

Addressing risks with insurance. Life insurance can play a key role in a client’s plan in terms of estate tax planning, wealth replacement, or ongoing support for a surviving spouse and children. And these policies can be an effective way to bolster income with tax-free proceeds. At the same time, health and long-term care insurance also deserve special attention, as clients will require sufficient health care coverage and should be aware of both the significant costs of long-term care and the benefits of these policies.

A New Resource

A reference guide can help you think through these latest issues and whether to recommend making any adjustments to the current plan. From the leading triggers that could require a change in plans to a 2020 tax rate schedule as a handy resource, our new guide offers a starting point for a thorough review. To learn more and to access our Financial Plan Audit, click Get the Guide below:

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This material is for educational purposes only and is not intended to provide specific advice.

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Hi, I'm Andrew, the managing principal in charge of business development. I can't wait to learn more about you and share our Commonwealth story.