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.