Annual reviews are an essential touchpoint for financial planners and their clients. As your clients\u2019 lives change, so will their financial plans. An annual review provides a valuable opportunity to assess a client\u2019s progress, pinpoint any necessary adjustments to their plan, and foster a strong, long-lasting relationship.<\/p>\n
Creating a standard workflow for your annual reviews is key to streamlining your process and providing consistent, quality service to all your clients. By following a structured approach, you can save time and ensure that every client receives the same level of care and attention during their review. The following workflow serves as a solid foundation that you can take and adapt for the specific needs of your clients.<\/p>\n
Before you get started, you will need to decide the most appropriate time to conduct your annual reviews. While the end of the year or beginning of the year are some natural and logical times to conduct an annual review, these can be busy times for both financial professionals and clients.<\/p>\n
Shortly before year-end may be a good time to at least check in with clients and conduct a quick assessment of their tax situation and determine if any year-end events should occur, such as bunching of itemized deductions, taking advantage of additional gifting opportunities, conducting tax-loss harvesting of an investment portfolio, or ensuring that required minimum distributions are taken. Checking in with a client early in the new year may be good for a portfolio review, as clients will naturally receive year-end statements from their various investment accounts.<\/p>\n
Scheduling a plan review outside these times may make the most sense because it will allow you to focus solely on the plan and take a more holistic view rather than focusing only on taxes or investments. Whatever you decide, be sure to add it to your service calendar<\/a> to set clear expectations with your team and clients about what will be done when, and by whom.<\/p>\n You may even consider doing an “agile review” vs. an “all-at-once review”. In IT-speak, “agile” refers to project teams incrementally releasing functionality as compared to delivering system changes all at once.<\/p>\n You can take the same approach with your “annual review” and segment it up throughout the year, perhaps addressing investments early in the year, goals and cash-flow mid-year, and taxes later in the year.<\/p>\n While monitoring and updating the plan is Step 7 of CFP Board\u2019s financial planning process, financial planning is continual. Preparing for an annual review is a time when you can revisit the initial steps of the process, starting with understanding the client\u2019s personal and financial circumstances.<\/p>\n Leveraging financial planning software with aggregation capabilities<\/a> can make this step easier. If the clients\u2019 accounts are all connected, the data will flow into your platform and you won\u2019t need to manually update the information. If a client has accounts that are not connected, you\u2019ll need to have the client help. You could send the client a questionnaire or ask them to share copies of their statements to get their updated information. To ensure that your clients can securely share their information with you, consider using a financial planning platform that offers a vault or other document storage feature.<\/p>\n Along with updating basic financial facts, it\u2019s important to reassess your clients\u2019 personal circumstances and family situation. Are there any new family members? Have they switched jobs? Have their goals changed? To capture this information, some planners just ask an open-ended question, like \u201cWhat\u2019s changed since we\u2019ve last met?\u201d or \u201cTell me what has happened since our last visit\u201d when they meet with their clients. Note that the second one is a statement and by its very own nature will be perceived as less threatening or interrogative to the client. Give your client a chance to answer and probe deeper with \u201cTell me more\u2026\u201d statements.<\/p>\n Alternatively, you can send your clients a pre-meeting questionnaire to complete. This is often done when onboarding new clients<\/a> but is also useful for your current clients. Some people may prefer to respond to these types of questions in the safety and privacy of their home.<\/p>\n This step is where your financial planning software can take over as the number cruncher to help assess the client\u2019s current state and answer the question of \u201cAre they on track?\u201d Like when the plan was originally produced, you\u2019ll want to review your clients\u2019 current state from a holistic perspective<\/a> by looking at all their goals and reviewing taxes, investments, risk management, and other key areas of their plan.<\/p>\n If the client is still on track, this is a great time to stress-test the plan against various economic or fiscal conditions, such as inflation, market volatility, lower returns, higher taxes, reduced social security, as well as a host of stressors, such as premature death, disability, or a long-term care event.<\/p>\n Developing and presenting recommendations tailored to your clients<\/a> makes for a highly desirable, hyper-personalized experience that they are looking for. As you prepare your recommendations, be considerate of the number of recommendations you make.<\/p>\n In the past, you may have \u201cweighed\u201d a plan. A plan with 27 recommendations and action items was considered to be nine times better than a plan with just three recommendations. But when the client is presented with a heavier plan, they may think, \u201cI have so many things wrong with me. I must be the worst client you\u2019ve ever seen!\u201d It can be very overwhelming for them and they won\u2019t be able to take action on 27 items. Start with a short list of recommendations that will feel doable and keep them moving forward.<\/p>\n Lastly, be sure to end the meeting with a discussion of action items so everyone is on the same page about what needs to be done and who will be doing it. You can summarize the recommended adjustments to the financial plan, work together to create a timeline for implementing changes, and schedule follow-up meetings or check-ins as needed.<\/p>\n As I mentioned in the previous step, it\u2019s important not to overwhelm your clients with too many things to do. Consider limiting the action items you give your clients to three. Once they complete those three, you can give them three more.<\/p>\n A thorough review of your client\u2019s financial plan will address all key areas and identify opportunities for improvement. To ensure that every aspect of the plan is covered, consider putting together an annual review checklist of the areas you want to cover with your clients. Your checklist could include everything from updating personal information, analyzing financial information, and an investment portfolio review to tax planning, estate planning, and insurance planning.<\/p>\n Keep in mind that each client\u2019s specific circumstances<\/a> will drive what you include in their annual review. It may make sense to segment your clients based on their life stage, financial complexity, net worth or income levels, or specific financial goals or concerns. You can then tailor your checklist to each segment, ensuring that each client receives a personalized and relevant financial review that addresses their specific needs and circumstances.<\/p>\n For example, an annual review for a young professional may be focused on career progression and income growth strategies, debt management, building emergency funds, starting retirement savings, and basic insurance needs. The key areas of interest for a couple with young children may be education planning and 529 plans, life insurance and disability coverage, basic estate planning, and balancing multiple financial goals.<\/p>\n By implementing an annual review workflow, you’re not just streamlining your operations\u2013you’re empowering your team to work more efficiently while simultaneously providing impactful, personalized service to all your clients. Leveraging technology and financial psychology<\/a> can further optimize your reviews, elevating the entire experience for both you and your clients.<\/p>\nStep 1: Collect the Data (Again)<\/h2>\n
Step 2: Complete Your Analysis<\/h2>\n
Step 3: Develop and Present Recommendations<\/h2>\n
Step 4: Discuss Action Items<\/h2>\n
Customizing Annual Reviews to Your Clients\u2019 Needs<\/h2>\n
Optimize Your Client Reviews<\/h2>\n