The end of year may come as a big relief, or maybe it leads to greater anxiety considering the current size of your task list. Either way, time is often at a premium as the year wraps up.
Here is a list of action items that you want to be sure to “check-off” as you close out the year.
Required Minimum Distributions from IRA accounts: No doubt you know RMDs must be processed before Dec. 31, but are you taking advantage of all the tools that help you complete this work efficiently?
Right now, you should have quick access to reports that detail the remaining RMD work required, whether available through your custodian or your reporting system. In addition, you should be able to tell if a client withdrew more money than required for meeting the RMD.
Better to know this in December when you can potentially make other adjustments versus when the client is filling their 2018 taxes.
Calendar Driven Account Types: A number of other qualified account actions must be completed by year end. Definitely at the top of this list includes the establishment of qualified retirement plans (Individual/Solo 401k, etc.) and the completion of Roth Conversions.
Perhaps you recommended these action items to some of your clients earlier in year. Double-check your records (hopefully recorded in your Customer Relationship Management program), and make sure that nothing was overlooked.
Charitable Donations: What options are available to clients who want to donate securities to a charitable organization?
Part of this process is knowing which securities have the greatest gains, which should be a report that is regularly reviewed and is easily accessible. Frequently, gifted securities are transferred or journaled to the account of the charitable organization.
Also, you could use a donor- advised type of account to address your client’s charitable gifting, which should be set up and the securities gifted to the account prior to the end of the year.
Providers/Partners Deadlines: Don’t assume all items have Dec. 31 deadlines. Providers/partners (custodian, broker dealer, trust company, etc.) might have an earlier deadline to help them better manage the end-of-year work volumes.
This may not be the case for all providers and types of transactions, but don’t be caught off guard. Pay special attention to the end-of-year messages and best practices shared by your providers.
Access Rights and Controls: It’s also a good time to review and audit the permissions for all your systems. Start with the individuals who no longer are with your firm and make sure that their access rights were truly removed from your systems.
Also, review the access rights of existing employees, and make any necessary adjustments based on position or responsibility changes that occurred during the year.
Finally, did you start any trial or temporary technology projects that are no longer active? Confirm that you don’t have any “orphaned” data feeds, access rights or other connections that were included in the project.
Back-Ups and Redundancy Procedures: Always make sure that back-ups and redundancy procedures work correctly. Too often a simple little “bug” in the process leads to data issues or worse … no back-up at all. Avoid this untimely surprise and confirm that everything is working properly.
Limit Technology Environment Changes: It is common for large companies to implement a “technology freeze” for the period at the end and beginning of the year.
The goal is to limit the environmental changes to ensure that all systems continue to operate as normal during this critical time. This is an important best practice to follow regardless of the size of your firm. Even a basic hardware change can lead to unplanned hours of effort — or worse, having to undo the work entirely.
Finally, the last business day of 2018 is a Monday, so be ready to receive last-minute client requests from the prior weekend. Happy New Year!
Dan Skiles is the president of Shareholders Service Group in San Diego. He can be reached at firstname.lastname@example.org.