We wanted to remind everyone of important things to look into, and to look out for, as you do your client reviews of 2018 and look forward to 2019.


Jon Lagerstedt: This week on The Essential Practice podcast, we wanted to remind everyone of some important things to look into, and to look out for, as you do your client reviews of 2018 and look forward to 2019. I’m Jon Lagerstedt.

Todd Crawley: I’m Todd Crawley.

Jon: And this is The Essential Practice podcast.

Todd, one of the things that struck me as I was thinking about and doing my taxes was a lot of the things that have changed, not just necessarily for tax code, but a lot of the contribution limits that are out there on a bunch of the qualified accounts and HSA accounts. And it just got me to thinking about some of the things that we might want to remind our audience to look out for, or to be mindful of, as they go into preparing their taxes this year; accounting for some of the funding that may be needed in some of these qualified accounts, but also looking at some of the increases in contributions that would be allowed in 2019.

Todd: Yeah, that’s a great point Jon. I think if you just back up for a minute, you know, advisors should be, at this point in time, completing their year-end reviews of 2018 and setting the stage for 2019.

You know, that year-end review with clients is not just stocks, bonds, and asset allocation. What did we do? How did we do it versus the benchmark? It’s all encompassing, I would think. It would be not only about how the portfolio did, allocations you may want to change, or make, or switch, or whatever. But it’s also about kind of “resetting” with that client. What happened in their life in 2018? Did anything change? Did they have a new grand baby? Did they retire? Did they buy another home? What happened in their lives in 2018? And just have that holistic conversation—which you bring up—with everything from contribution limits to life events to portfolio review. It’s not just about the portfolio review.

Jon: Very important fact, right? As you’re doing these portfolio reviews—client reviews—to think about these life events and the impact they may have based on the things you just listed, Todd, around beneficiaries, changes in trust-structure, whatever the case may be.

You know, when I think about IRAs, and we’re getting ready to close out 2018, by April 15 from a tax perspective, we want to make sure we funded any IRAs that we’re claiming in 2018 by that deadline of April 15. But also think about the increase to contribution limits, talk to your clients, and make any adjustments. See if they can go ahead and maximize their contributions to their IRA accounts, to their HSA accounts, to their 401(k) accounts. Right? Maybe they can only increase 1%, whatever the case may be, but to be forward-thinking and maximize, as much as they can, the tax-efficient vehicles.

Todd: Yes. And another point to bring up, Jon, is if you have a client who is still working, when you’re doing their portfolio review for your account that you manage, that has to carry over to their 401(k) account at their employer. Are they properly allocated? Did the allocation get out-of-whack the last couple years in terms of allocation? And to not just focus on, as said earlier, on only that money [the advisor] manages for that client. But, [taking] that holistic approach. One other thing too is, if [your client] is retired and do they have grandchildren, do they have a 529 to help set up their college education? Are they contributing to that? Is it structured properly in terms of the beneficiaries? There is a whole list of things that we could talk for a half a day about in this review. But I think the main point we want to get across is: This year-end review is not just the portfolio and the allocation and how we did last year versus the benchmark—it’s that holistic approach about life events, increased contributions, changes in tax law, everything to set up 2019.

This is the last point I’ll make and turn it over to you. I had someone tell me, years ago—and this has always stuck with me—he said that, “I never lost a client because a stock or a mutual fund that I sold them went down. I lost that client because it went down, and I didn’t call him and tell him why.”

Communication is key.

Jon: Yes, almost over communication [is needed]. And by doing so, you’re probably going to be able to gain a lot of that insight into the personal balance sheet of your households and truly understand where opportunities and challenges lie in each person’s life.

Todd: Yep!

Jon: With that Todd, I hope that everyone listening today can go ahead and do a mental checklist of all the different things that we need to account for with the basics of asset allocation and really looking at that holistic balance sheet of the household and trying to put people in the best position we can in 2019 and beyond. I’m Jon Lagerstedt.

Todd: And I’m Todd Crawley.

Jon: And this is The Essential Practice podcast.

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