Why regular financial reviews are critical for achieving aspirations
You’ve set out a financial plan and followed the course of action you were advised on. Now, you can simply kick back and forget about it, right? Wrong. Effective financial planning is about much more than simply coming up with an initial strategy. Regularly going back to your plan and checking in with your financial adviser or planner is crucial for ensuring it remains suited to your needs and aspirations. It should be, at least, on an annual basis.
As with all of life’s plans, things go awry, opportunities can present themselves or you may simply have a change of heart. If you fail to go back to your financial plan you may find years later that it hasn’t suited your goals and priorities for some time.
It’s also the perfect time to reassess your life goals. Often, the bigger picture can get lost in the day-to-day. Frequently coming back to what you want to achieve, and whether you’re on track to meet aspirations should be part of your financial plan.
If you’re still not convinced about the need to revisit your financial plan at regular intervals, we’ve got six reasons you should be doing so.
1. Your aspirations and priorities change
When you look back at what you wanted to achieve a decade ago, it’s likely there’s been at least some change. It’s normal for your aspirations and priorities to shift over time.
You may have started with an investment portfolio that took a relatively high level of risk in a bid to deliver higher returns. However, after welcoming children, stability may now be a greater priority, for example. Likewise, as you plan for retirement you may have taken a measured approach to spending, putting money away to fund your later years. Now that you’ve reached the milestone, you may want to increase spending to really enjoy your life after giving up work.
Chatting with your financial adviser about what your priorities are now and how they have shifted gives you an opportunity to realign your wealth and assets with this in mind.
2. Your situation can alter
It’s not just your attitude and personal goals that can change either. Perhaps you’ve received a pay rise at work and now have more disposable income to invest. Or maybe you’ve received an inheritance and your current financial plan hasn’t taken this into consideration.
When your personal situation changes, it’s always worth taking a step back and asking if it’s something that should affect how you’re handling your finances. It means you can get the most out of your money for your circumstances, helping you stay on track and maybe even exceed the targets you set previously.
3. Review performance
While constantly watching the performance of your investments isn’t a good idea, as they will fluctuate, ensuring you effectively review your plan is crucial. How will you know if you’re on the right path otherwise?
Setting set points when you’ll review how your plan is progressing is an important element in meeting your goals. You may find that you’ve gone off course at some points. However, taking action as early as possible means you can minimise the impact it has on your overall goals. It’s also an opportunity to review those areas that have outperformed and could give you a nudge to restructuring assets to follow this.
4. Wider political and economic factors have an impact
Your personal situation and aspirations should be at the centre of your financial plan. But there’s no denying that some factors outside of your control can have an impact too. From legislation altering the way you can access your pension at retirement and tax-efficient allowances changing, to geopolitical tension influencing investment performance. There are many factors to consider.
It’s often not possible to predict all these events or the full impact they’ll have. However, by regularly reviewing your financial plan, you’re in a better position to prepare and respond to potential risks and opportunities.
5. Improve your confidence in your finances
If you ever feel worried about your money or unsure if you’re making the right financial decision, touching base with your financial planner can help. The world of finance can seem complex and ever-changing. As a result, you may not be certain about whether a decision is the right one, even if it’s something you’ve previously covered in a financial plan put together some years ago.
The more you assess your finances and engage with your plan, the more confidence you’ll feel with making decisions. It’s a process that can help give you peace of mind that you’re taking steps towards the financial independence you want.
6. Effective estate planning
While passing away isn’t something anyone wants to think about, Inheritance Tax and estate planning is an important part of the financial planning process. As your circumstances, views, and wealth change, it’s natural that what you want to happen to your estate will change too. A review is a perfect time to think about your financial plan beyond our life, who would you want to benefit from your wealth?
If you’d like our help, whether to create or review a financial plan, please get in touch.
IHT Planning is not regulated by the Financial Conduct Authority.
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