Four questions to ask your financial advisor before the new year

The end of every calendar year is an ideal time to check in with your team of advisors. In fact, there’s a good chance you have already scheduled a fourth-quarter check-in to talk through any last-minute tax implications for your investment plan. But you should really use this moment to help make sure your investment plan is positioned well for the year (or years) ahead.

“This is an opportunity to reset,” says Emily Irwin, head of Advice Center with Wells Fargo Wealth & Investment Management. “It’s a chance to help make sure your goals are updated and take a big-picture look at how things are going with your investment plan.” That’s especially important in 2024, as a new administration and congressional leadership are about to step in amid uncertainty around future tax policy — all of which could impact your finances.

Here, Irwin shares four questions to ask about your investment plan before the start of 2025, as well as guidance on how to get the answers you need.

Question 1: Are my investments still aligned with my goals?

Revisit both your short-term (less than five years away) and long-term (more than five years away) goals, Irwin says. Your priorities could have shifted, which could also impact your goals.

Think about everything, from upcoming education spending and retirement to what you want to leave to your family or charity. Then, consider your day-to-day and month-to-month cash flow; finally, maybe most importantly, confirm your risk tolerance.

“We all want our plan to help us achieve our goals in the least risky way possible,” Irwin says. “Are we not aggressive enough, or are we too aggressive?” Talking your concerns through with your advisor can help uncover any changes you should make.

Question 2: How could upcoming life changes impact my investment plan or goals?

Think about whether you are planning, or could be facing, a big change of some sort. Some common major life changes or events include:

• Buying property or moving to a new home.
• Adding a dependent or sending one out into the world.
• Marriage or divorce.
• Retirement.
• Significant medical expenses.

Connect with your advisor if you’re facing any of these life changes and talk through the implications for your investment plan. For example, Irwin says that retirement could be a time to consider how to plan, financially, for unexpected medical emergencies. “My advice is to be overly planful,” she says, “and build in what your costs might really look like. Take prescription drugs costs: Whatever you think is a realistic number, consider adding a 10% or 20% overage into your plan.”

Question 3: Did my portfolio perform as expected? If not, what do I need to change?

Irwin says this involves more than looking at your portfolio’s returns. Instead, consider what you want the portfolio to do and communicate your expectations to your team. “You probably have areas that outperformed and others that underperformed,” Irwin says. “Year-end is a great time to make adjustments, if you need to.”

Also consider rebalancing your portfolio, particularly if you could benefit from some tax-loss harvesting. By selling off underperformers, you could reduce capital gains taxes and then use the proceeds to bring your investments back into balance with your goals and preferred risk level.

Question 4: What should I consider about market volatility or other issues in 2025?

We don’t yet know what’s going to happen with the 2017 Tax Cuts and Jobs Act, which has many provisions that are currently set to expire in 2025. “You should talk about what possible strategies for different possible outcomes,” Irwin says. “But you may want to take a wait-and-see approach for now.”

Meanwhile, she says, you can identify your goals and understand your risk tolerance, as you know that periods of volatility will happen. “If you hit a rough patch but don’t have concerns, then you know that you and your team have done a good job of crafting a good investment plan.” If you still have that emotional response, it may be time to adjust further. “If volatility threatens to allow your emotions to impact your investing,” Irwin adds, “work through that with your advisor. The goal is to be in a better place as we go through 2025.”