Many investors set a financial plan at the start of the year and don’t reassess it until December. According to Jeffrey Fratarcangeli, founder and CEO of Fratarcangeli Wealth Management, that’s a mistake.
“Waiting for a full year to revisit is, in my opinion, not the best wealth management practice,” Fratarcangeli said. “At Fratarcangeli Wealth Management, we strongly recommend quarterly reviews to our clients, and at a minimum, conduct semi-annual reviews.”
With markets delivering what Fratarcangeli describes as nearly a full year’s worth of returns by mid-year, now is the moment to evaluate whether a portfolio still reflects both current market conditions and personal financial objectives, not just whether the numbers look good on the surface.
Here are four areas Fratarcangeli says investors should examine before the second half of the year begins.
Benchmark against the right index, not just the S&P 500
The first mistake investors make when assessing mid-year performance is comparing everything in their portfolios to the S&P 500. That benchmark only tells part of the story.
“If you are invested in value stocks, how have you performed compared to the value index? If you are in growth, how are you doing against that index?” Fratarcangeli explained. “You may be underperforming compared to the S&P but outperforming your value benchmark, and that’s actually the right outcome.”
The more important question, he adds, is whether the current allocation still matches the investor’s time horizon and risk tolerance. Strong returns might prompt a different conversation than most expect.
“You may say, these are really good returns. Am I taking too much risk relative to where I’m at and what I’m trying to achieve? There are two sides to every trade.”
Assess liquidity before anything else
When Fratarcangeli sits down with clients for mid-year reviews, insufficient liquidity is one of his clearest indicators that a plan needs adjustment.
“Your financial plan needs to account for adequate liquidity,” he said. “If you get into a position where you need more liquidity than you thought you did, and the market is free-falling, you could be forced to sell at the worst possible moment to regain that liquidity.”
With markets up significantly through mid-year, Fratarcangeli also raises the question of whether it makes sense to take some profits and build that cash reserve, particularly for investors approaching a major life transition or with near-term financial obligations.
“Money you know you will need in the next couple of years should not be exposed to market risk,” he explained.
Separate the signal from the noise
Mid-year is also when investor emotion tends to run highest, in both directions. Fratarcangeli points to this past March, when widespread selling pressure caused many investors to consider exiting the market.
“Many clients asked whether they should sell in March because the market was selling off,” he said. “And then we had the most successful April since April of 2021. Anyone who sold in March would have sold at the absolute worst time.”
His framework for determining whether a plan actually needs adjusting is straightforward: if short-term liquidity needs are covered, the retirement timeline hasn’t materially changed and long-term objectives are intact, the answer is usually to stay the course.
“As long as your short-term needs are met, block out the noise and focus on your long-term objectives,” Fratarcangeli said. “Why would you change your investment strategy with those things in place?”
Revisit the plan when your life changes, not when the market moves
The clearest trigger for a genuine mid-year plan reassessment, Fratarcangeli says, is a major change in personal circumstances.
He referenced a recent client conversation in which a 49-year-old was considering retiring at 55 rather than 62.
“In that instance, he needed to retool his plan,” Fratarcangeli said. “That change in retirement age shifts everything — the timeline, the risk exposure and the liquidity needs.”
Beyond life events, a mid-year review should also examine whether any market sectors are over- or under-weighted relative to an investor’s original strategy, and whether changing conditions have created opportunities that weren’t on the table at the start of the year.
“Is there an area of the market that’s oversold that we could take advantage of?” he explained. “Are we too heavy in value, not enough in growth, or vice versa? That is what a thorough review looks like.”
For more insight from Jeffrey Fratarcangeli, visit www.fratarcangeliwealth.com
