Xentum | Why it’s important to review your financial plan

Why it’s important to review your financial plan

July 23, 2019 - 3 minutes read

Posted by Claire Parker

In a world of slower economic growth, slimmer investment returns and longer lives, the need for a well-reviewed, updated financial plan has become an essential asset for future success. It’s a task you might be tempted to put off or believe there’s no need for. You may have even reviewed your finances, but how deep did you delve? 

Financial planning is about dealing with several different financial issues, by using proper planning to achieve your financial goals. It’s about income management, budgeting, tax planning, health, risk management, estate planning, investment planning and asset protection, all while managing any debts you might have (among many other factors). So it’s safe to say there’s a lot of value in keeping all of the moving parts of your plan ticking along nicely. 

Following your plan is crucial to securing your financial future, but sticking to it is the real challenge. A study by The Money Advice Service found that most adults only utilise financial advice when plans go awry, with only 36% of their respondents admitting they sought financial advice in 2018. We know that reactionary financial planning can potentially become an uphill struggle; that’s why it’s best to preempt any life changes that might be lurking around the corner. 

There’s merit in being disciplined. Unhappiness with particular investments, or the desire to redirect your funds, may make you want to alter your plan, and it’s best to speak to an adviser about how to best redistribute your investments. 

There are a few aspects that you’ll want to keep track of to make sure your plan is up to date. 

Your goals may change. Since you started your financial journey, you may have been joined by new companions to make the journey with you, be that a new child or the arrival of a new relation through marriage. With these new companions come new saving goals. Be that university tuition, medical care or a new house, by fine tuning your plan to facilitate these new changes you can stay on the straight and narrow. 

You’ll also want to make sure that you stay on top of any regulatory changes as they emerge. These can be hard to keep track of, as they depend heavily on press exposure. From changes to Inheritance Tax to Lifetime Allowance pension alterations, keeping an eye out for any changes can help maintain your plan. 

New opportunities and risks are a constant in the financial world. Regular reviews of your plan offer a perfect time to take a look at what may benefit or threaten your goals. Is your current exposure to risk still right for you? Could your goals be better achieved by a tweak in investment? Maintaining an awareness of factors that may help or hinder your goals will help to keep your plan fluid and flexible. 

As part of your original plan, you may have projected how your wealth will change over the year by looking at your cash flow. However, your predictions are only as good as the data that was provided – cash flow can change as the years go on and by updating your long term projections, you can gain an overview of your progression. You never know, you might be closer to your goals than you think. 

Keeping track of your progress is paramount to achieving your goals. There may be speed bumps or roadblocks along the way, but with careful finetuning and foresight, you can make sure your plan maintains its direction and momentum so you can achieve the goals that you’ve dreamed of.

For advice on how to create, maintain and update your plan, don’t hesitate to get in touch