When should a financial advisor conduct a portfolio review with a client?

Conducting a portfolio review with a client at least annually or during major life changes is essential for several reasons. First, an annual review provides a structured opportunity for the financial advisor to assess the client's investment performance, risk tolerance, and financial goals. It ensures that the investment strategy remains aligned with the client’s current objectives and market conditions.

Major life changes, such as marriage, divorce, having children, retirement, or a significant increase or decrease in income, can greatly impact a client's financial situation and goals. During these times, a portfolio review helps to adjust the investment strategy accordingly, ensuring that it continues to serve the best interests of the client.

In contrast, limiting the review to only when the client requests it neglects the proactive approach that advisors should take in managing client portfolios. While the market’s volatility can signal the need for adjustments, it’s not the only factor warranting a review. A fixed five-year interval may not adequately address changes that occur in the interim, such as shifts in the client's financial circumstances or significant market fluctuations. Regular, strategic reviews create a more dynamic and responsive relationship between the advisor and the client, ultimately leading to more effective financial management.