By Brian Kuhn CFP, a financial advisor on NerdWallet’s Ask an Advisor.
Your financial planner plays a strong supporting role in managing your finances and providing counseling for your plans. You likely expect your financial planner to help you with tasks such as opening accounts or creating a financial portfolio, but there is also a great deal of work in the background that is not directly related to investing that she should be managing. This work — such as keeping documents current or monitoring insurance — is important to your financial health, too.
Your financial planner should be taking care of the following 10 tasks to optimize your financial position at all stages of your life.
1. Draft Your Legal Documents and Keep Current Copies
Legal and financial estate planning go hand in hand. If you intend to share access to any credit, retirement or investment accounts with others, you need to have the proper documentation to enact those wishes. Similarly, as major milestones occur – such as marriage, divorce, a child entering adulthood or needing power of attorney — you will need to update these documents to ensure that the proper parties are still affiliated with each account.
2. Keep Your Beneficiary List Up to Date
Your beneficiaries will inherit your estate according to the wishes specified in your will or trust. It’s vital to keep this information up to date to ensure that your estate is managed correctly. Your financial planner should check in regularly to ensure that you are aware of who is listed as a beneficiary and make any relevant changes to this list.
3. Encourage You to Face Tough Questions
Thinking about growing old or dying can be difficult, but ignoring these changes in life can put you at serious risk. Your financial planner should be blunt when discussing the inevitabilities of age and future risks to ensure your financial portfolio will take care of you should you become ill, need to retire or experience other major life changes.
4. Help You Improve Your Credit
If your credit score is not where it should be, your financial planner should provide advice on improving it, such as helping you set a monthly budget, reduce debt, save more and correct errors on your credit reports. This advice should be given in a way that protects your identity to prevent further damage to your financial reputation.
5. Help You Set a Budget and Improve Your Cash Flow
Setting a monthly budget is essential to managing your debt. If you are having trouble meeting your current financial obligations or increasing your savings at an appropriate rate, your financial planner should provide suggestions for ways to improve your financial standing.
6. Complete Paperwork for Accounts Your Planner Doesn’t Manage
It is a given that your financial planner should fill out any paperwork necessary to open or update the accounts they manage. However, if you are adding to your financial portfolio on your own or through another professional, your financial planner should still be willing to assist you.
7. Be Available for Financial Emergencies
Unexpected events – such as an unexpected death, expensive repairs, a medical emergency, a sudden move or a natural disaster — could affect your finances. As you move to repair the damage, your financial planner should be readily available to answer questions and offer support.
8. Evaluate Your Household’s Insurance Needs
As your financial situation changes, you should know how well you are protected. When you move, acquire additional assets or expand your family, your insurance policy should be updated to provide proper support. Your financial planner should keep track of these changes, providing reminders and advice regarding how to update your insurance so you always have the protection you need.
9. Monitor Current Events That Affect You
As major events unfold, they will often have an impact on your financial portfolio. If you are invested in a company that is receiving bad press, the market is performing poorly or events occur that could impact the value of major assets like housing, you need to stay informed. Your financial planner should be able to explain these events to you and provide advice on how to minimize the damage to your finances.
10. Review All Your Employee Benefits
Your employee benefits package includes several valuable assets including life insurance, health insurance or investment programs in addition to your retirement plan. Your financial planner should review each of these in turn to ensure that each of these items is being used to its full potential and provides you with the protection you and your family need.
