Regular reviews with your financial advisor can help you better achieve your wealth goals and avoid missed opportunities throughout your life.
Putting financial plans in place to help you accumulate, enjoy and preserve your wealth is essential, but it’s arguably just as important to make sure those plans are reviewed on a regular basis.
Here we provide five reasons why ongoing financial planning advice is necessary.
Most people will have financial plans for short-, mid- and long-term goals – from buying a house and paying children’s university fees, to planning for retirement and passing on wealth to the next generation.
These broad goals typically don’t change much over time. But other life events come along – new family members, a business sale, unexpected illness and international relocation, to name a few.
Then there are external factors, such as changes to financial legislation and tax rules, rising and falling inflation and interest rates, and the emergence of new financial products. All of these can have an impact on your financial plan.
Regular reviews of your financial position at any given time can help ensure your plan always aligns with your goals and takes into consideration any such changes.
“Wealth-planning advice is never ‘one and done,’” says Nick Ritchie, senior director of Wealth Planning at RBC Wealth Management in the British Isles. “The reality is that any advice has a shelf life, especially when dealing with longer-term planning. Personal circumstances and legislation governing the structures and products held inevitably changes. If you look back 10 or 20 years, the picture is completely different. Advice that was suitable at the time is naturally going to expire and needs to be reviewed.”
Such reviews can assist in adhering to the intended plan. “We don’t often see clients looking to make massive changes to their goals unless something has shifted in their life circumstances,” says Annabel Bosman, regional centre head – London and South-East for RBC Brewin Dolphin. “But through constant dialogue, we can make small course corrections that make all the difference in the long run.”
Investment experts stress how important it is to avoid “noise” in the markets and not make emotionally charged financial decisions. However, when wars are taking place, the political landscape is unpredictable and the economic picture is mixed, it’s understandable that people will either want to move into “safer” investments or, on the flip side, try to take advantage of market conditions.
“Taking such a short-term, reactive view might seem reasonable,” says Chris Matthews, managing director at RBC Wealth Management in the British Isles. “However, it’s at times like this that investors really need to go back to basics and remain focused on long-term goals. Having an advisor that understands you and who can respectfully challenge your thinking gives you the opportunity to take a step back and pause for a moment.”
This plan of action can work when there are both positive and negative stimuli. For instance, a new investing trend may come along that you think you should be in on but may be wholly inappropriate. Likewise, an external event, such as a change in government, may cause market turmoil and make you want to reconsider your investments.
Having an advisor check in with you on a regular basis can provide external accountability. It’s possible to get overwhelmed by news headlines and forget that you started out on a journey of wanting to achieve certain wealth goals. It’s also easy to get complacent, thinking an initial planning exercise will solve for all problems forevermore.
“Working with an advisor over time means they can also ask the questions that aren’t easy,” says Matthews. “We often have to ask challenging questions around the reasons why clients want to take certain actions, which typically uncovers something unexpected that even the client hasn’t realised. This will then help with making informed decisions that are in-line with their goals.”
“This external counsel of an advisor can be especially important if there is a couple involved,” adds Bosman. “There may be a difference of opinion or uncertainty on how to proceed. We know that women often approach wealth planning in a different way than men, for instance, and are often more engaged with ongoing planning around life stages. Working with an advisor can help both parties come to an agreed-upon approach.”
An RBC survey revealed that inheritance tax and gifting are the biggest financial concerns of high-net-worth individuals – but the same survey also shows that 55 percent of respondents need guidance on educating the next generation about wealth.1
As much as ongoing financial advice can assist with efficient estate planning, an advisor can play a pivotal role in working with families to understand how wealth will pass from one generation to the next.
“Every family is different, and discussions around wealth can be quite sensitive,” says Ritchie. “Indeed, it does happen where a family doesn’t talk about wealth transfer and then a parent dies and the children suddenly inherit wealth that they weren’t expecting and aren’t equipped to handle the emotional and financial implications.”
An advisor can facilitate these sometimes uncomfortable conversations based on what they already know about the older generations and their objectives. What’s more, they can put multi-generational teams in place where it makes sense for younger members of the family to be speaking to younger advisors who will be on a similar wavelength.
“By taking this approach, we can help people pass wealth in exactly the way they would hope, and manage the process over years, even decades,” says Matthews.
If you have a long-term, ongoing relationship with an advisor or an advisory team, that relationship can give you reassurance not only in times of market turmoil, but also when your personal circumstances change.
“Our teams not only get under the skin of our clients’ financial goals, but try to get to know them as people as much as we can,” says Matthews. “What drives them, what their life ambitions are, what their outlook on life is. That helps us anticipate what they need financially, and potentially spot problems – and opportunities – before even they realise them.”
These discussions form an integral part of annual reviews, which document your ongoing planning with regard to investment, tax-efficient structuring, cashflow management, inheritance-tax planning and other considerations that might arise in the future, such as angel investing and philanthropy.
“For an ongoing-advice client, we might have 20 or 30 interactions throughout the year,” says Ritchie. “But the annual review is a line in the sand where the entire picture is formally documented. So, it’s not just a summary of your products, but a record of how you’re feeling about your succession plan, your goals in retirement and so on.
“This ties back to accountability and is a very useful living document that can be stored alongside wills, insurance policies and other paperwork, to provide a ‘black box’ in the event a surviving spouse or the next generation has to pick up the affairs unexpectedly.”
1 RBC Wealth Management survey, November 2023. Sample: 600 UK-based HNW individuals.
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