Life doesn’t stand still. Even in these most uncertain of times, one thing you can be sure of is that things will change. Some of those changes will be of your own doing, while others will come out of the blue and be beyond your control.
That’s why financial planning should never be considered a ‘set and forget’ exercise. Just as Charles Darwin recognised that the most successful species were those that adapted to survive, your financial planning must be capable of adapting to changing circumstances to remain relevant and effective.
Here are four key areas that can change over time, which can affect your and your family’s financial wellbeing.
1. Your situation and goals
It is easy to put stakes in the ground for life’s big milestones: getting married, having children, relocating, retiring. However, there are so many other, smaller transitions that happen throughout our lives. They may not all have the same gravitas as the major life events, but they do often bring about a shift in your needs and goals, even if you do not fully realise it at the time.
Consider how different your life and aspirations were ten years ago. It is likely that many of these changes came about incrementally, rather than through conscious decision-making. Like a bucket under a dripping tap, if your financial planning is left unchecked, eventually you will find it no longer does what it set out to do.
By scheduling regular reviews with us, you will be prompted to reassess your situation and will be able to keep on top of your needs and goals as they change and evolve.
2. Your family situation
If you welcome a new member to your family – such as grandchildren – in all the excitement you may be forgiven for not immediately thinking to include them in your legacy planning. An annual review offers you the chance to amend your arrangements to accommodate any new arrivals. Likewise, if any of your family members are celebrating big life moments (like graduating or buying a home) or facing difficult challenges (such as health issues or divorce), you can plan financial support in advance to help support your family through difficult times, and make sure you can really make a difference to your loved one’s lives.
3. Investment and asset performance
We all expect market movements to fluctuate, so reviewing your arrangements should not be about chasing performance. It is about checking that your assets and wealth are still structured in the most suitable and tax-efficient manner, according to your current situation, income needs and goals. For example, as your assets grow over the years, you may find your estate becomes increasingly liable to inheritance tax – in your review, you can plan steps to help mitigate this before it becomes an issue.
4. External influences
If the last couple of years have taught us anything, it is that you never know what’s around the corner, and that even the most watertight plans can be upended by forces beyond our control.
External factors needn’t be as major as a global pandemic to affect your financial planning. Tax rules, for example, can change at any time and can have a significant bearing on your tax bill. It does not always have to be bad news – there may be new opportunities or allowances that you can take advantage of if you are regularly reviewing your financial planning.
Keeping on track
Having a financial planning review at least once a year gives you the space to reflect on where you are, what you want and what’s happened over the last few months. That way, you can make sure your arrangements remain on track to allow you to meet your goals, and plan as best you can for what might lie ahead.
Isn’t that peace of mind worth a recurring date in your diary?