Most of us service our boiler and car on a regular basis to ensure they are in good working order and don’t let us down, but we don’t always give the same care and attention to our finances.
It is common for people to think they don’t need to regularly review their finances because of a preconception that only those with significant wealth need to do so. This is not true. Whatever wealth means to you, whether it is tangible assets or the security of knowing that you can provide for your family, regular ongoing advice can be very important.
Areas which can be explored as part of this process are:
What assets do I have and what are they worth?
It’s easy to lose track of the value of your assets if you aren’t taking the time to regularly review your financial position. Personal circumstances can change as much as market movements and legislation. Being aware of what you are worth helps identify other areas you may need to address, such as the size of your assets which could mean your loved ones paying an inheritance tax bill.
Where is my money invested? Are you comfortable with how its value could be affected in times of economic uncertainty or volatility?
How your assets are invested is critical to ensuring your goals are achievable but also to avoid any nasty surprises along the way, whether this is an ISA, pension or other investments. The current economic downturn has affected all investments, those who have a good grasp on how their money is invested are dealing with the turmoil in a much more considered way, in part because they have remained informed and involved in regular reviews with a professional financial adviser and therefore have a good understanding as to how their investments are affected.
Who will benefit from your pension savings if you die?
A larger number of people are now saving into a pension due to auto-enrolment rules, but how many have completed an Expression of Wish declaration? What happens if one isn’t in place?
It is clearly important that these are kept up to date for all pensions you may have. It can be easy to lose contact with past schemes and if trustees and scheme administrators are unable to establish your most up to date personal circumstances then there is a very real chance that an ex-spouse or partner, for example, could receive the benefits with a current partner or your children missing out as a result.
How will any proceeds from a life insurance policy be distributed or do you have enough cover in place?
Have you taken out life insurance but haven’t put the policy in trust? According to Aegon, only 6% of life policies in the UK are written in trust.
Some of the basic benefits of a trust include:
Helping to avoid inheritance tax. Under normal circumstances the proceeds would form part of your estate if not written in trust.
You don’t need probate to be granted in order for policy proceeds to be paid out. Therefore, the people you care about the most can receive monies more quickly, at a time when it could be needed the most.
Greater control – a trust can ensure the benefit goes to the people to which it was intended.
Of course there is also the issue of insufficient life insurance cover being in place at all.
Do you have a Will in place and is it up to date?
Having a valid will which reflects your current wishes will save your family and loved ones from making un-necessary difficult decisions. Without a will, your estate will be subject to the laws of intestacy, which could mean that:
Your money is given to people you would not have chosen.
Your assets are sold instead of being kept in the family.
Your final wishes regarding your funeral are unknown.
Dependents could even become subject to social care.
Do you have enough cash reserves? What do you spend each month?
The broad guidelines are to have at least 3 times your income in accessible funds to cover any unforeseen emergencies, yet statistics show that 15% of Brits have no savings at all and one in four people’s savings are estimated to last them less than a month. Regular financial reviews provide the opportunity to take stock of your expenditure through the use of a budget planner. Circumstances change, whether it is expenditure decreasing due to mortgages/loans coming to an end or increasing due to taking on a bigger mortgage, paying for children’s education or simply because basic costs such as utility bills have risen more than someone’s income.
At Armstrong Watson we provide an ongoing advice and review service for our clients. Review meetings are an opportunity to make any changes that are necessary to ensure that your plans remain on track. This is also the time to review any changes in your personal circumstances and discuss legislative changes that may impact on your previously agreed goals. We can also now do this remotely by video, face to face or by telephone if you prefer.
If you would like to make an appointment for a review of your financial plans, please get in touch with Ryan Anderson on 07879458428 or email her on ryan.anderson@armstrongwatson.co.uk.
