Financial Planning

Your Wealth Management: 4 Missteps to Avoid in 2023

February 02, 2023

With the new year comes new opportunities to grow your financial wealth—and to avoid potential pitfalls to get you off track. Particularly in light of the savings and tax provisions introduced by SECURE Act 2.0, here are four missteps to avoid in 2023:

  1. Failing to update your beneficiary designations.
    It is frightening, but all too common, how many people fail to designate a beneficiary for their retirement accounts—or don’t update their beneficiaries when their circumstances or wishes change. By not designating a beneficiary—including a back-up beneficiary in the event that your primary beneficiary predeceases you or dies with you—you are allowing someone else to determine who receives your retirement savings after your death. Without updated beneficiaries, your retirement accounts and your will can default to your estate and end up in probate, which can be very expensive and tie up your assets for months.

    What to do instead: Ensure your documents stay consistent with your goals by meeting with your wealth advisor to review your beneficiary designations every two to three years or when life events happen.
  2. Allowing emotions to dictate your strategy.
    Even the most intelligent and savviest investors can find it difficult to keep emotions out of their investment strategy. But when they don’t, bad things can happen. When friends and media are hyping the latest “next hot thing” investment or dramatizing declines in the market, it’s easy to be seduced into chasing returns and derailing your financial plan and investment strategy out of fear of short-term losses or fear of missing out.

    What to do instead: Stay disciplined and commit to a diversified portfolio tailored to your situation and goals. If market declines spark fear, remind yourself of the purpose of your investments and why they may be outperforming and underperforming at different times.
  3. Focusing on the short term.
    Bear markets are inevitable, and while it’s tempting to change your investing strategy when things aren’t going well, it is more important than ever in volatile markets not to lose sight of your long-term financial strategy. Focusing on the short term can lead to panic selling trying to time the market, or frantic trading—just when it is most important to take the long view.

    What to do instead: A long-term, goals-based, individualized financial plan will be built to withstand upswings and downturns. Rather than focusing on short-term market performance returns, check with your wealth advisor to ensure that your plan still works.
  4. Making decisions without talking to someone—or the right someone.
    One of the biggest missteps investors can make is making financial decisions in a vacuum—or by listening to the wrong people. While your friends or colleagues may be confident in their investment strategies, your strategy should be built using your own personal goals, needs, and situation. What may make sense for someone else may not be what’s best for you.

    What to do instead: Even the most experienced investors can benefit from talking to their wealth advisor, accountant, or attorney before making a financial decision. Your wealth advisor knows your situation and will help you filter decisions through your long-term strategy and financial plan. And wealth advisors who are also fiduciaries—like those at Washington Trust Wealth Management—always put your interests first. Click HERE for our thoughts on how to choose a wealth advisor.

What questions or concerns do you have about your wealth management plan in 2023? Contact us today.

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This document is intended as a broad overview of some of the services provided to certain types of Washington Trust Wealth Management clients. This material is presented solely for informational purposes, and nothing herein constitutes investment, legal, accounting, actuarial or tax advice. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. Please consult with a financial counselor, an attorney or tax professional regarding your specific financial, legal or tax situation. No recommendation or advice is being given in this presentation as to whether any investment or fund is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors, or markets identified and described were, or will be, profitable.

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