An annual review and spring cleaning of your investment plan could help keep your overall plan and your long-term goals on track. Try these four steps.
For many of us, spring is a time to organize our homes and declutter our living spaces. While that spring ritual tends to focus on cleaning physical spaces, it also can be a reminder to tidy up the financial aspects of our lives. James Mosrie, senior wealth strategist for Wells Fargo Wealth & Investment Management, says making necessary tweaks to your investment plan is just as important as prepping your home for warmer weather.
Since personal circumstances and economic factors change often, Mosrie says reevaluating and updating an investment plan on a regular basis can help it stay in line with your long-term financial outlook. “Any change in life gives you the opportunity to assess where you are, adjust goals, or reprioritize what’s important,” he says.
In this guide, Mosrie shares four tips for refreshing your investment plan this spring.
Schedule: Make time to make it happen
What it usually means: Spring cleaning your home is a big undertaking that may require several days or weekends to complete. It can have benefits beyond decluttering, so it’s important to reserve time for it. Failing to schedule time for a regular refresh could make the task more difficult when you finally do get around to it.
What it means for your finances: Just as you set aside time for household chores, set aside time to routinely evaluate your investment plan. Without this important step of scheduling time for the evaluation, you might be unaware of underperforming investments that could take your plan off course. Keep in mind, reviewing your plan may take more than one conversation and may involve multiple people, so map out a timeline that’s manageable and works with everyone’s schedule.
Your next step: Schedule time to take a deep dive into your finances — including times when you can meet with your advisors (financial, tax, and legal advisors, as needed) for an in-depth review.
Assess: Identify what’s working and what’s not
What it usually means: When you clean, you obviously spend more time on areas that need extra work. It can help to do a walk-through to identify the areas that need extra attention before you begin.
What it means for your finances: It can help to do a similar walk-through of your finances with your advisors so you can get a full understanding of the condition of your plan. Mosrie says a key thing he looks for with clients during this step is whether their investment performance is tracking with their circumstances and their goals.
“When you examine an investment plan, you want to take risk tolerance and time horizon into consideration,” he says. “For example, someone who’s nearing retirement or who’s recently sold a business may not want to take much risk because they’re in a wealth preservation stage.”
Your next step: Work with your financial, legal, and tax advisors to conduct a thorough assessment of your financial situation. Take a look at your income and expenses, evaluate investment and retirement accounts, and review other necessary documents to pinpoint areas for improvement.
Act: Update where necessary
What it usually means: This is when the real work begins. Remember, enlisting the help of others can streamline your efforts and provide outside perspective on the best way to complete the job.
What it means for your finances: Revising your investment plan may involve adding, changing, or removing elements so your plan better aligns with your current situation or any financial objectives that may have changed. This could include rebalancing investment portfolios, updating estate plans, or adjusting saving and spending habits.
Mosrie says a coordinated approach at this step is key. “It’s important to have a team of specialists guide you through these changes,” he says. “Investment plans typically have financial, tax, and legal implications, so you need to have your CPA, attorney, and other advisors working together to develop a plan tailored to your goals.”
Your next step: Work with your financial advisor to make the necessary changes, and loop in other specialists like attorneys and tax advisors whenever needed. Implement any additional recommended adjustments to your investment plan as well.
Regroup: Debrief after you declutter
What it usually means: This is about making a plan to keep things neat, which could involve more frequent (but smaller scale) cleanings to help make next year’s spring refresh more efficient. Getting children involved in the ongoing maintenance may make the work easier and provide opportunities to pass along values about caring for what matters most.
What it means for your finances: Talking with your financial advisor more often could mean smaller tweaks to your investment plan each year and quicker responses to changing circumstances. Consider having a long conversation with your financial advisor once a year and checking in every few months by phone or email to discuss any concerns.
“I believe you should stay in frequent communication with your advisors and get into a regular rhythm of reviewing your plan with them,” says Mosrie. He also thinks that communication should extend to family. “As clients age, their children become more involved in the financial picture as heirs, so I believe reviewing your plan should be a family conversation and a family exercise.”
Your next step: Continue checking in with advisors to make any necessary adjustments throughout the year. Find a cadence for reviews that works for you to help make sure your investment plan stays on track. Involve family in your planning conversations whenever possible and appropriate.
Wells Fargo Wealth & Investment Management (WIM) is a division within Wells Fargo & Company. WIM provides financial products and services through various bank and brokerage affiliates of Wells Fargo & Company.
Wells Fargo & Company and its affiliates do not provide tax or legal advice.
