Financial Fitness

Midyear Financial Review: 6 Questions You Shouldn’t Be Afraid to Ask

Here's what to ask during your midyear review with your financial advisor.

by Teri Cettina - June 11, 2018

You chose your advisor because you want trustworthy advice that can help guide your financial future. So you shouldn’t be shy about asking questions — particularly now.

The year’s halfway point is a smart time to review your investment plan with your financial advisor. A lot has already happened — financially speaking — but you have six months left. That gives you plenty of time to revisit your investment plan — and make a few course corrections, if needed, before the year closes.

So what issues should you target during this midyear meeting? Zar Toolan, Managing Director and Head of Advice for Wells Fargo Advisors, suggests asking these six key questions:

1. Do you see any problems ahead that I don’t see?

This question prompts your Financial Advisor to review your Envision® plan and your likelihood of hitting your personal financial goals. These goals (also called “personal benchmarks”) might include investing for your kids’ college costs, retiring at a certain age, or leaving a legacy for your family.

Your advisor can then give you an updated “Target Zone” that measures how likely you are to meet each financial goal. Your ideal zone is between 75% and 90%. You actually don’t want a 100% result on this financial test.

2. Are my investments protected well enough from the ups and downs of the market?

Occasionally, you may need to adjust your portfolio to maintain your ideal mix of stocks, bonds, and cash. This process, called rebalancing, involves selling and buying some investments to keep your financial basket well diversified. Your accounts probably will need some rebalancing this year.

3. Interest rates are rising — what action do I need to take?

Depending on your personal financial situation, your advisor may talk to you about bonds and other fixed-income investments. While bonds have offered relatively low yields during this bull market, they may become attractive again and can help protect your portfolio against market volatility.

Your advisor might also talk to you about any existing or new debts. This could be a good time to lock in a lower rate on a mortgage or other loan before interest rates rise further.

4. What financial “to-do” items should I consider tackling in the second half of the year?

This is a great question that lets you pick your advisor’s brain about financial tasks you may have missed. Should you add or subtract insurance? What about applying for a line of credit? Or diversifying your tax-advantaged accounts?

5. Is there anything I’m overdoing that I should relax on a little?

This might sound like an uncommon question, but it’s one that advisors really appreciate. Just think: It can be tricky for an advisor to say, unsolicited, “Hey, you’re ahead of what we’ve modeled in your plan. You can afford to live a little!” However, sometimes that’s the right answer.

You could be doing such a standout job of planning for your future that you’re not fully enjoying the present. Keeping your plan up to date is a great way to help ensure that you’re living your best life.

6. I’ve gotten married, left my job, or experienced another life change. How does that affect my investments? 

You should always review your investment plan if you’ve had a major life change or if your financial goals have shifted. If you leave a job, for instance, you might swap your goal of investing in a beach home for a new goal of starting a business.

Teri Cettina is a personal finance writer based in Portland, Oregon, and a frequent contributor to Lifescapes.

Additional Resources

Darrell Cronk, President of Wells Fargo Investment Institute, answers the top three questions investors should ask in 2018.

IMPORTANT: The projections or other information generated by Envision regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results. Results may vary with each use and over time.

Envision methodology: Based on accepted statistical methods, the Envision tool uses a simulation model to test your Ideal, Acceptable and Recommended Investment Plans. The simulation model uses assumptions about inflation, financial market returns and the relationships among these variables. These assumptions were derived from analysis of historical data. Using Monte Carlo simulation, the Envision tool simulates 1,000 different potential outcomes over a lifetime of investing varying historical risk, return, and correlation amongst the assets. Some of these scenarios will assume strong financial market returns, similar to the best periods of history for investors. Others will be similar to the worst periods in investing history. Most scenarios will fall somewhere in between. Elements of the Envision presentations and simulation results are under license from Wealthcare Capital Management LLC. © 2003-2018 Wealthcare Capital Management LLC. All Rights Reserved. Wealthcare Capital Management LLC is a separate entity and is not directly affiliated with Wells Fargo Advisors.

Asset allocation and diversification cannot eliminate the risk of fluctuating prices and uncertain returns nor can they guarantee profit or protect against loss in declining markets.

Investments in fixed-income securities are subject to market, interest rate, credit and other risks. Bond prices fluctuate inversely to changes in interest rates. Therefore, a general rise in interest rates can result in the decline in the bond’s price. Credit risk is the risk that an issuer will default on payments of interest and/or principal. This risk is heightened in lower rated bonds. If sold prior to maturity, fixed income securities are subject to market risk. All fixed income investments may be worth less than their original cost upon redemption or maturity.