Do you have a financial circle of trust?

Many people assume the average tax practice is on vacation or closed from April 16 until January of the following year. This may be true for small firms that only prepare tax returns, but not for full-service accounting and financial services firms. Summer and fall are actually a fantastic time to meet with all the people in your circle of trust.

This includes your tax advisor, financial advisor, mortgage consultant and attorney. During the busy season of January through April, many firms are bogged down with the nuts and bolts of filing returns and do not have time to devote to planning. As such, you should take advantage of the summer and fall to bring your circle together to make sure all the pieces of your financial and legal world are working in a cohesive manner.

It is ideal to meet with your circle at least once a year or any time you have a life-changing event such as a birth, death, marriage, divorce or inheritance, etc. By meeting with your circle of trusted advisors, this allows the proper amount of time to make any necessary tweaks or adjustments prior to year-end. If things have changed significantly from the prior year or even from the beginning of the year, it is better to be proactive rather than reactive.

Things to discuss include, but are not limited to:

  • Have you paid in enough tax year-to-date or do you need to adjust your withholdings?
  • Is your financial advisor managing your portfolio with the tax implications in mind?
  • Has anything major in your life changed that would warrant a revision to your will?
  • Have you exceeded the estate limit or need a trust?
  • Is it time to think about refinancing your current mortgage or are you thinking about purchasing a new home?
  • Is your business on track to meet the projected numbers for the year and if not, what changes can be made to make sure your company hits the target?

If you do not have all the necessary professionals in your circle of trust, now is an excellent time to begin the process of developing your team and circle of trust. Be proactive, not reactive and your financial picture will be dramatically impacted. Look for advisors who can educate and guide you through the financial process. Any advisor worth their salt will be able to tell you why they do things a particular way and will give you the tools to be able to understand the process.

Do not be afraid to step outside of your comfort zone. If you have been using the same accountant, tax preparer, advisor, or attorney for years and do not seem to be having much communication with them currently, contact them to find out why. If you do not get the response you are looking for, it is time to find a new person to fill their spot in the circle of trust.

If you have outgrown any of your advisors and their abilities, seek out new sources that have experience with your level of need. It is always a good idea to interview new firms to find out if they will be a good fit for you.

Once you have a circle of trust you are comfortable with, use them to help you. Seek their council when making big financial decisions and make sure all parties are on the same page. For example, do not sell stock for a gain with your broker until you have discussed the tax implications with your tax preparer. Making sure all parties are well informed can take the surprise out of transactions in the long run.

If you have never had a circle of trust and are in the financial place where it makes sense for you to have one, ask your friends, family, and neighbors for referrals. This is a great place to start if you are unsure about whom to contact.

Make sure you have the tools in place to manage your financial life. The circle of trust are people who can help you actively manage your finances and will help you achieve your goals.

HLM Financial Group is located in downtown Decatur and offers accounting, tax preparation and planning, financial planning and investing.