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The Importance Of An Annual Financial Review



Pesach is rapidly approaching and one of the cornerstones of the holiday is ridding our homes of chametz. This cleaning process is understandably stressful for many families since it involves turning one’s house upside down and searching every nook and cranny for unleavened bread, which is not permitted to even be seen on the holiday. Despite the tedious process, most folks are presumably happy after this annual ritual is complete. Not only is it nice to experience Yom Tov in a freshly cleaned house, but it allows one to inspect every inch of their home for items that require upkeep.

This annual maintenance is not unique to the holiday of Pesach. It’s beneficial to annually review your personal finances as well. Taking the time to go through a checklist of items to ensure that your investments and financial plan are all up to date is imperative to achieving one’s goals. Below are some items to revisit every year.

  1. The last three months of credit card statements: This is a wonderful way to find unnecessary expenses. Everybody has memberships, subscriptions, or streaming services they have not used in years. Canceling these unnecessary monthly expenses is a great way to bolster your cash flow and possibly even add more funds to savings.
  2. Emergency fund: It’s important to have an adequate emergency fund of at least three to six months’ worth of expense money for a rainy day, but it is also important to ensure that you don’t have too much money sitting in cash. Given historically high inflation rates, having funds sitting in cash is just losing buying power with inflation, and may be better off invested to save for your future.
  3. Automate your savings: Are you automating your saving to your retirement and taxable accounts? If not, the sooner you set this up the better. When the markets crash or when they soar, you won’t have to determine when is a good time to invest since you are doing so automatically.
  4. Asset Allocation: Asset allocation is the breakdown of stocks, bonds, real estate, cash, and alternative asset classes within your portfolio. Getting this breakdown correct is one of the main drivers of returns in one’s portfolio. It’s important to assess your life situation and your asset allocation to determine if your portfolio’s overall structure is still in line with your goals and time horizon.
  5. Investments: Is a specific investment within your portfolio not performing as planned; did the mutual fund manager’s philosophy change; are there better products on the market? While a buy and hold strategy is the optimal way to invest, it is also important to ensure that your investments are still the best suited to meet your needs.
  6. Beneficiary update: One of the biggest mistakes investors make is not periodically reviewing their beneficiaries on their life insurance or retirement accounts. There is no shortage of horror stories of divorced couples who still have their ex-spouse as a beneficiary instead of their new spouse or children. Even if you’re happily married, it’s important to make sure that your insurance and retirement accounts are set up to pass to the correct people upon your death.
  7. Insurance review: People’s insurance needs change over time. At different points in your life, you may need more or less life insurance. Your disability policy may not be sufficient or may no longer be necessary. Additionally, it may be time to consider long-term care coverage. Be sure to review your risk management needs and the corresponding insurance solutions to protect you and your family.
  8. Tax advantaged accounts: This year, Pesach coincides with the tax deadline, which is a good reminder to make sure you are taking advantage of all the tax advantage accounts where appropriate. This includes retirement accounts such as Roth and Traditional IRAs, 401(k), 403(b), and others. It is also worth considering whether to contribute to a Health Savings Account or a 529 College Savings account. There is a myriad of tax-advantaged accounts that may be available to you and they should not be overlooked.
  9. Estate planning documents: Estate planning documents like a will, living will, durable power of attorney and healthcare proxy should be reviewed periodically to make sure the people in your life who will be given important responsibilities upon your incapacity, death or illness are still the same folks you want with these duties. Any life change, such as marriage, divorce, birth, death, job change, or windfall may impact your estate plan. Plan accordingly.
  10. Schedule a time to check in with your trusted advisors: It’s unrealistic for most people to be able to catch every detail that should be updated on their own. Additionally, it’s impractical to assume that your trusted advisors will reach out to you every time there has been a change in your life. It’s recommended that you proactively reach out to your accountant, attorney and financial advisor at least once a year to update them on your situation and ask for proactive steps that you can take to improve your finances. Hopefully, this annual check-in will provide you with actionable ideas to help you achieve your goals. At the very least, you will be doing your part to make sure nothing fell through the cracks.

Wishing all readers a chag kasher v’sameyach!

Disclaimer: This article authored by Jonathan Shenkman a financial advisor at Oppenheimer & Co. Inc. The information set forth herein has been derived from sources believed to be reliable and does not purport to be a complete analysis of market segments discussed. Opinions expressed herein are subject to change without notice. Oppenheimer & Co. Inc. does not provide legal or tax advice. Opinions expressed are not intended to be a forecast of future events, a guarantee of future results, and investment advice. Investing in securities is speculative and entails risk. This is not indicative of any particular policy or insurance carrier. Results will vary depending on individual circumstances and current market conditions. Any payment guarantees are based on the claims paying ability of the insurance company. Adtrax #:

Readers are encouraged to ask their personal financial questions, which may be quoted from and addressed in a future column, by emailing [email protected].

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Jonathan I. Shenkman, AIF® is the President and Chief Investment Officer of ParkBridge Wealth Management. In this role he acts in a fiduciary capacity to help his clients achieve their financial goals. He publishes regularly in financial periodicals such as Barron’s, CNBC, Forbes, Kiplinger, and The Wall Street Journal. He also hosts numerous webinars on various wealth management topics. Jonathan lives in West Hempstead with his family. You can follow Jonathan on Twitter/YouTube/Instagram @JonathanOnMoney.