A New Year's Checklist of Questions to Ask Your Financial Advisor

As 2016 comes to a close, people are thinking about New Year's resolutions -- and many of them are related to finances. Some may want to focus on saving more for retirement, while others strive to pay off student loans or consumer debt.

But the end of the year is also a smart time to examine your financial plan, ensure that you are on the same page with your advisor and that he or she is the right fit.

[See: 7 of the Best Stocks to Buy for 2017.]

Here are several questions you should ask your advisor to help make sure you are on the right track financially in 2017.

Are you acting as a fiduciary and how are you paid? There continues to be discussion about the Department of Labor's fiduciary rule -- which will require all financial advisors who provide retirement investment advice to always act in their client's best interest -- and whether it will be enacted under the Trump administration. Regardless of what ends up happening with the regulation, it is important to ask your financial advisor how they are compensated and what their fee structure is.

If they are overly incentivized by commissions or other sales goals, you may run the risk of being recommended unsuitable investments. If your advisor dodges your questions or continually acts overly defensive, you should consider looking elsewhere for financial advice. Regardless of assets or background, everyone deserves a trustworthy, responsible and respectful advisor, and there are many financial professionals who already act as fiduciaries regardless of whether or not the new regulations are implemented.

What level of risk is in my portfolio and does it align with my financial goals? Investors need to have a complete understanding of the risk profile they are comfortable with in their portfolio, and then work with their advisor to ensure their portfolio is aligned with their risk tolerance and is designed to achieve their individual financial goals. If you are young and feel comfortable with taking on a fair amount of risk, you can set a more aggressive asset allocation and then gradually adjust it to be more conservative as you get older and approach retirement. Regardless of your investment strategy, monitor your portfolio and speak with your advisor regularly.

How can I continue to invest for the long term amid so many unexpected market events? This year was one for the books when it comes to surprises. From U.K. Brexit referendum to the U.S. presidential election, investors faced many unexpected market events at the global and domestic level. Those who reacted out of panic, selling off stocks or making other quick decisions that didn't align with their overall investing strategy, lost out when the market rallied shortly thereafter.

[See: 10 Long-Term Investing Strategies That Work.]

The election serves as a prime example. On the night Donald Trump won, Dow futures plunged more than 800 points, but a lasting rally ensued the next morning and investors who had sold off their stocks or stockpiled cash in the days leading up to the election were unable to reap the rewards. The reality is that volatility is an inevitable part of market activity and because of that, short-term market events should not impact your long-term financial plan. Focusing on quality investments, particularly in the U.S., will be the best protection from the unexpected.

In addition, it continues to be proven that buy-and-hold strategies are successful when incorporating a timeline of many years, and implementing them can position you for long-term financial stability and success. Work with your advisor to design a long-term investing strategy and stick to it, even when other investors get the jitters.

Does my financial plan align with my estate planning strategy? It is never too early to prepare estate planning tools like a will, trust or life insurance policy, and it is equally important to revisit your plan regularly, such as annually or when there are changes in relationships, health, finances or charitable interests. Working with your advisor to incorporate estate planning into your financial plan will help ensure that your documents accurately reflect your current and future income, assets and tax implications. Regardless of your assets or income, an estate plan is a necessary part of your overall financial plan, and will help ensure your wishes are documented and your loved ones are protected.

[See: 7 of the Worst Stocks to Buy for 2017.]

The new year is sure to bring many ups and downs -- and likely a few surprises -- for the markets. Having open and regular communication with your financial advisor will help you set realistic financial goals, prepare for volatility and lay the groundwork for long-term financial stability.

Masood Vojdani is a contributor to The Smarter Investor blog, and founder and CEO of MV Financial, an asset management firm based in Bethesda, Maryland. MV Financial provides investment and advisory services to retail and institutional clients.