Updated: Apr 14
As I often do with my blog, I’m going to vent a bit due to the unskilled and amateurish attempts of others who have gone before. Sometimes we learn why we, and others, do things as simply a response to others - and then that response became a habit.
The financial services industry has a lot of well-meaning intentions, but poor communication patterns. New agents and advisors frequently offer “2nd opinions”, a “portfolio review”, or a “policy review”… and more often than not, it just doesn’t work.
Why doesn’t it work? One is because most account holders and policyholders just don’t see the need or the value. The second reason is that people KNOW that, if you open the door a crack and let them in, they’ll just want to tell you “how much better off you’d be if you had gone with them”. No one wants to be told that they made a mistake!
If an agent offers a “policy review”, what do you really need to know? How much coverage you have, is the policy in-force, and is the payment affordable? (If it wasn’t affordable, you would’ve dropped the policy.) The agent will then probably talk about how much you “should’ve” bought, how it’ll be more expensive to get it today, but better to get it taken care of now.
If an advisor offers a “portfolio review”, it’s just a chance for them to show off “how much better” their clients returns have been OR how smart they were to avoid certain other investment recommendations. Or perhaps they just want to give an “economic weather report” on the stock market and perhaps make “token allocation changes” in your portfolio – possibly with the illusion that they are “managing your money”.
It’s all a “not-so-clever confidence play” to try to plant doubt in your current agent or advisor to get you to buy from them instead.
This message is why even clients - who have bought from their own agent or advisor - may resist going in for a financial review. They are afraid of being in an interaction where they may be “sold”. (In this example, being “sold” can be akin to being ‘assaulted’. It’s just an unwelcome advance by someone who may be trying to ‘extort’ money through making sales where value or need isn’t perceived.)
And if you wanted to do “your own review”, it’s not hard today to look up your portfolio investment holdings on Google Finance, look up your policy coverage, and put it together on a spreadsheet… all by yourself.
So, why bother, right?
What Is A REAL Financial Review And Why Should I Do Them?
Loren Dunton is considered the “father” or "founder" of the financial planning profession. He was the one that introduced the first financial planning credential to distinguish educated and qualified financial professionals who help people to wisely spend, save, invest, insure, and plan for financial independence and peace of mind.
Wouldn’t it make sense that financial reviews should be about as comprehensive as when you originally bought your investments and insurance products?
Internal Factors to Review:
What I mean by internal factors are things that primarily affect you, your spouse, your family, your parents, your workplace, etc. Changes happen all the time. This is why periodic reviews are very helpful. As life changes, we may need to change your priorities… or adjust in how you approach accomplishing your priorities.
What kinds of internal factors can change?
Marriage / Divorce
New Children or Grandchildren
Family members passing
Receive an inheritance
Purchase a home
Sold a home
New Job (increasing or decreasing pay)
Received a bonus
Laid Off / Forced Retirement
Started a business / Sold a business
Purchased or sold rental property
Repaid a life insurance policy loan
Took on more debt
Longevity and health and how it affects your long-term money
Age changes and taxes
… and many more!
All of these reasons (and plenty of others not listed) are reasons to do a true financial review.
External Factors to Review:
External factors are things that happen outside of your family or work.
What kinds of external factors can change?
The general economy
Government programs and spending (that affect your tax rates and changes),
Political & monetary policies
Demographics and GDP growth estimates
Stock market volatility
… and many more!
Why should we review these things? Because there may be ways we can take advantage of these changes!
How can we do that? We look at how you spend, save, invest, insure, and plan for the future and see if your savings and assets can be repositioned to help shelter or possibly “immunize” yourself from potentially negative consequences.
How do we do these annual reviews? It sounds like an awful lot of work!
I think we’ve found a way to streamline the process a bit. It starts with a review of your financial priorities. Below, I have links to fillable PDF documents that help you to quickly review your priorities. You may complete one or both of them. (For example, if you’re 55 or older, and you have young children at home, I’d recommend completing both.)
You simply complete the PDF document and email it back to me as an attachment to: firstname.lastname@example.org. When you send your completed forms back, you can ask any questions you want in your email. You can also request a meeting (or not).
Based on your email, your answers in the attached PDF, or if there’s another reason that I think we need to get together, I’ll reach out to contact you and set up a convenient time to meet – either in-person or via web conference and we can talk about whatever is important to you and what I wanted to review with you for your situation.
I hope I’ve conveyed the importance and value of doing a true financial review. When the only constant is change… it’s important to make sure you are prepared for and can even take advantage of changes.