Broker Check

Petsis Posts #9: The Importance of doing a thorough Financial Review

| April 16, 2019

With Q1 in the books and tax time behind us (unless you’re on extension!) I think it is important to make sure we have reflected on our 2018 financial plan and goals.

I estimate in 2018 that Tony & I wrote over 50 financial plans. But we know the planning for these clients won’t stop there. Over the years, we have learned that ‘tweaking’ plans is important because goals, objectives and life stages are be constantly changing. Financial plans are not meant to be set in stone and put on the bookshelf. They require constant attention and reflection. Here are three financial plan adjustments we suggested to various clients this year that may be able to help you:

  • Estate planning Strategies- we found a client had minor children named as beneficiaries for a qualified plan held outside of the office. We suggested this client review guardianship and trust planning with their estate planning attorney. Turns out, the guardianship in their estate plan needed to be updated for a parent who had passed away. Not having a proper plan for your children to inherit retirement accounts or assets before their age of majority (18 in PA) will likely result in tie up of assets in probate, assets passing non-tax efficiently and possibly contra to decedent’s wishes.
  • Retirement planning- a client in a low tax bracket was making pre-tax contributions to their retirement plan. I explained that Roth contributions may be in the client’s best interest based on income level. After consulting a tax advisor, the client changed the contributions to Roth. I believe this will save this client taxes down the road, particularly in helping make the client’s social security benefit less taxable in retirement.
  • Education planning- when reviewing student loan debt with a client, I found that their loans carried an above market rate interest rate. Additionally, that they were paying off the lowest balance, lowest INTEREST rate loan first. Based on their quality credit score and income level, I suggested that they obtain a quote for refinancing the loan. The client was able to refinance at a rate that was almost 3% lower than that current rate.  

Additionally, if you choose not to refinance or are unable to for any reason, one should consider (typically) paying off the highest interest rate loan first… not the lowest balance loan…why? Check out my next post (Petsis Posts #10: Highest Rate or Highest Balance) to find out!