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Retirement Planning > Saving for Retirement

A 4-Point Checklist for Year-End Planning

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During the past 12 months, we have experienced a global pandemic resulting in numerous deaths and hospitalizations, mass layoffs and furloughs. Also, working and learning from home has become the “new normal,” while in-person events from parades to commencement ceremonies have gone virtual.

In short, 2020 was a very memorable year that many people would like to forget. But it’s not over. We still have a few weeks left to ponder the year that was — and the year ahead.

For financial advisors, December usually is reserved for year-end planning. In this tough year, to effectively prepare clients and practices for 2021, make sure you address these areas on your year-end planning checklist.

1. Make virtual year-end client meetings as personal as possible.

In light of the pandemic, it is understandable that most your clients can’t meet in person.

However, take advantage of videoconferencing tools such as Zoom to virtually check in with clients. Also, add a personal touch by showing your face (and encouraging clients to do the same). In-person meetings may not be possible right now, but it is comforting for clients, especially if they are elderly, to see a friendly face at this time.

Remember to take at least a few minutes at the beginning of year-end client meetings to ask how they and their families are holding up, and how they plan to spend the holidays.

 Some modern financial planning technology platforms include cutting-edge presentation tools that can be integrated with videoconferencing applications, allowing you to demonstrate various scenarios, investment strategies, tax-loss harvesting opportunities, spending and saving habits, progress toward short- and long-term financial goals, and more for clients in real-time during year-end meetings.

2. Consider tax-loss harvesting and tax-efficient investment approaches.

While the Tax Day deadline was understandably extended this year due to the pandemic, the tax-filing deadline in 2021 remains slated for April 15. Although advisors frequently begin thinking about tax-loss harvesting opportunities in client portfolios in December, there may not be as many losses to harvest right now due to the recent market upswing.

Nevertheless, utilize tax-loss harvesting tools in advanced financial planning technology systems to stay on top of tax-loss harvesting opportunities now and all year long in 2021, and communicate them to clients through alerts and reports in these offerings’ interactive client portals.

 You also can use year-end meetings with clients to show them the potential impact that various Coronavirus Aid, Relief and Economic Security (CARES) Act provisions could have on their taxes for 2020, and for 2021 if extended.

Furthermore, with a new Biden-Harris administration, many are anticipating some changes to the U.S. tax code. Use this year-end planning period to work with clients to identify tax-smart investment strategies and products that could better position portfolios to reduce taxes under the new administration.

3. Rebalance accounts.

December also is the month that advisors undertake annual or quarterly rebalancing for client accounts.

Depending on market performance during the past year and predictions for 2021, you may wish to recommend changes to permitted deviations from model portfolios, or the frequency of rebalancing.

Some modern financial planning technology solutions enable you to automatically rebalance hundreds or even thousands of accounts at once, and easily input any changes to rebalancing conditions or frequency.

4. Update plans for retirement income, health care and emergency expenses.

COVID-19 has thrown many for a loop. With millions of Americans having been laid off or furloughed since the beginning of the pandemic, 74% of workers plan to work during retirement and 19% of Americans in their 50s intend to work full time after retiring, according to the November 2020 SimplyWise Retirement Confidence Index. Furthermore, nearly 50% of Americans laid off or furloughed due to COVID-19 have saved nothing for retirement in the last year.

You can play an important role in providing peace of mind to clients whose retirement goals and savings have been upended by COVID-19. During year-end meetings, advisors can help clients craft or amend financial plans designed to make up for retirement income and savings losses they have suffered.

To help these sensitive conversations run smoothly, some modern financial planning solutions offer self-directed workflows that clients can complete on their own time and pace. You can email clients a link to an interactive, easy-to-navigate portal where they can securely enter details about their income, goals in retirement, and personal and family health history.

If you work with a technology vendor that is integrated with a third-party health care industry research provider, these workflows may be able to show clients how much savings they would likely need to meet health care costs during all phases of retirement throughout their lifetimes — and comprehensively display these health care cost estimates alongside projected living and leisure expenses across all phases of retirement.

In addition, with so many concerns related to health care and the ability to meet expenses during prolonged periods of unemployment, you can work with clients to build emergency funds as part of detailed financial plans. This way, clients can enter 2021 knowing they are taking steps to ensure they will not be unprepared for unexpected health care expenses, and that they can meet regular expenses during extended unemployment or pay cuts.

With such an extraordinarily volatile year coming to a close, advisors need to position themselves to provide as much added value as possible for clients in 2021. The above year-end planning checklist can help advisors address some of the greatest areas of concern for their clients as well as their practices.

Angela Pecoraro is CEO of Advicent, the provider of NaviPlan, which supports over 140,000financial professionals across more than 3,000 firms worldwide.


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