Annual finance check up

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Joined: Mon Jan 30, 2017 1:47 am

Annual finance check up

Post by advice789 » Wed Apr 19, 2017 9:21 pm

Each year, I go to the doctor for an annual physical. He always request a normal blood test and then depending on my aches or pains or health, may order more tests to identify any risk issues. In the same manner, am thinking of a similar Finance Check up. Intent is to obtain added objective advice vs relying on my own personal thinking. Has anyone done this? Who do you consult ( fee planner , broker, forum like here others) and what type of questions do you ask? In terms of questions, one friend checks his asset allocation and may makes adjustments. Another reviews his actual vs expected spending while a third looks at inflation and return assumption to assess whether she is on track. Currently, am about 5 to 10 years from full time retirement with a bit over 15 years of spending covered by expected pensions and savings - Thoughts of questions to ask and who to consult for an annual fin checkup?

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Re: Annual finance check up

Post by EvelynTroy » Wed Apr 19, 2017 10:14 pm

In another discussion someone asked about the value of getting a second opinion perhaps from a fee-only hourly financial advisor on some of the items you have brought up. I thought that idea had merit, however don't know that I would want to do it annually, perhaps with a big life change happens.

Do you have a written Investor Policy Statement? If not consider taking the time to develop one. It will give you a compass and direction regarding your goals, asset allocation, risk tolerance, clear reminders of what not to do, etc.
You can use it for your own annual check-up - review and remind.

References on importance of ISP - ... statement/ ... _statement

I used the framework outlined in the wiki as a basis for the one I developed.

Your idea of an annual financial check-up is an excellent one - I feel like I do that via my ISP that I review annually.

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Re: Annual finance check up

Post by advice789 » Wed Apr 19, 2017 11:48 pm

Have an investment approach but more informal. Good point to create the written document

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Re: Annual finance check up

Post by carolinaman » Thu Apr 20, 2017 9:31 am

I think a periodic checkup with a fee only financial adviser would be useful. This could be done every 5 years unless there has been some major change in your finances and retirement planning. I do not see the need to do this for investments but more the big picture: are you on track for retirement, what adjustments need to be made, what other things should you consider (LTC, tax strategy, others)? IMHO, this is something everyone should do at least 5 years out from retirement.

The challenge is finding a bona fide fee only adviser who will do a good review and not try to switch you into other investments that you do not need. Too many advisers masquerade as fee only but are looking to sell you something.

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Re: Annual finance check up

Post by jlcnuke » Thu Apr 20, 2017 9:45 am

I find that my financial plan is already detailed enough that I can evaluate my situation without paying someone to help me do so.

Annually I:
1. Review past year spending. I use CC's for 99% of my spending so I can track pretty much everything I spent by downloading that information, as well as using tools like Personal Capital to do the same and automatically categorize my expenses. This review includes analyzing for any "one off" items that may not be recurring and evaluate whether or not my budget needs adjusting to reflect actual spending/saving habits.

2. Review Asset Allocation and adjust if necessary to stay within ~5% of my target asset allocation. This includes evaluating if I want to adjust my target asset allocation as well.

3. Review funds I'm invested in to ensure they haven't changed significantly and verify that no substantially similar but better option isn't available now (unlikely for my personally picked funds, quite possible for those funds in my 401k that don't currently have Vanguard index fund type low expenses).

4. Review investment performance vs. investment plan to determine if I'm still on track for my retirement goals or if adjustment would be necessary to meet those goals. If adjustment would be necessary, I then evaluate if the adjustment is viable and desirable or if I want to adjust the goals instead (in a substantial down-market for instance I'd have to decide if I wanted to contribute more to make up for the losses and stay on track for the same retirement timeline or if I want to push out retirement or some point in-between those options).

5. Review my insurance policies and legal documents to ensure they are still adequate This review also includes price-checking policies from other companies to see if the rates would be lower.

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