You might not realise your pension or investment is due for a review. It’s easy to get complacent when you have a provision for retirement or savings in place. But, you could find you need a full financial overhaul; it really depends on your circumstances, aspirations and some external influences, all of which are likely to change over time.
It’s important to ensure your investment and pensions remain relevant and appropriate for you. If any of these ten signs ring alarm bells, don’t hesitate to get in touch.
1. You don’t have a strategy
You should always have a goal in mind when it comes to saving. It’s impossible to plan for a situation if you’re not sure what that is.
Investing for the long term, towards your retirement, for example, will require a very different strategy to saving towards your child’s education or home renovations. Potential timescales will dictate everything from the level of investment risk to take, to the type of product you use.
Having measurable objectives means you can properly plan. It might be defining your aspirations for retirement, or a sum of money for a future purchase.
2. You don’t know what your plan is worth
You don’t need to be religiously monitoring your pension or savings value. In fact, especially if you’re saving for the long term, checking its value during times of volatility could cause unnecessary concern, if it’s worth has temporarily decreased.
However, if you don’t have a broad idea what your pension or investment is worth, it’s a red flag that you’re not paying enough attention. This could be especially likely with auto-enrolment Workplace Pensions. As it’s set up on your behalf and contributions are taken before your net pay, it’s easier to overlook how it’s performing.
3. You’re not sure how it’s invested
Whether it’s in a cash-based product or invested in stocks and shares or investment funds, not knowing how your pension or savings are invested is a sure sign you need a review.
The most appropriate investment is often determined by your attitude towards risk. If your portfolio’s risk profile is too low, you may not receive the investment returns you are hoping to achieve. If it’s too high, you will be taking on risk you may not be comfortable with and potentially experience greater levels of volatility.
This is where a financial planner can really add value. You might not have the time or inclination to know exactly how your pension is invested. Instead, you can place that responsibility with a trusted professional to manage it on your behalf.
4. Your attitude to risk has changed
Over time, your circumstances and financial situation will change. For better or worse, it’s inevitable. If you’re nearing retirement, it’s likely you might want to reduce the level of investment risk your pension portfolio is exposed to.
Your attitude to risk and therefore investments should be reviewed at least annually to ensure they remain relevant. Any change in your circumstances and tolerance towards risk should result in a review in the very near future.
5. You’ve missed out on tax-free allowances
The Tax year-end is April 5th. If you can maximise tax-free savings allowances such as the £20,000 2018/19 ISA (Individual Savings Account) allowance and don’t, you are missing out on valuable savings. ISA allowances don’t roll over from year-to-year, either; use it or lose it!
For pension contributions, the maximum most people can tax-efficiently pay in is £40,000 a year. If you can afford this and have not made the most of the tax-free allowance, a review could be in order. There may be good reason for not utilising them, in which case you may still benefit from a conversation with your adviser or planner.
6. You receive a statement for a forgotten plan or policy
If you receive postal updates and providers have your current home address, you should receive an annual statement. If one arrives for an investment or pension you had forgotten about, it is very likely in need of a review.
It might be a Workplace Pension from an old employer or an investment with a previous bank. In any circumstance, a good, detailed financial plan should incorporate all policies, plans and accounts you have. Making sure they are all aligned towards achieving your personal goals is crucial.
7. You’ve experienced a big life event
Whether it’s a growing family, getting married, divorced or retiring, you need to consider how this affects your financial position and existing arrangements. It might be that you’ve received an inheritance, even.
Big life events can influence our outlook on life and your priorities may have changed. Making sure your investment strategy remains in line with your aspirations is an important step to achieve them.
8. Your portfolio has lost value
If you’re investing for the long term, some level of volatility should be expected. But, if your investments or pension has lost value unexpectedly, it may be that the underlying investments are not performing as well as they should. Remember, past performance is no guarantee of future gains.
You should also consider the fees a provider or intermediary is charging you. Whether they are figuratively cheap is irrelevant if they are not providing value for money.
9. There’s been regulatory or economic change
There are some things in life beyond your immediate control. We recently had a particularly tame budget from Chancellor Philip Hammond in terms of pension and investments. But, that doesn’t mean circumstances aren’t likely to change in future.
World economies might also play a large part in your investment’s performance and suitability. Whilst difficult to predict and plan for, reacting to external influences as efficiently as possible will mean you are in the best position.
10. You can’t remember the last time you spoke to your financial planner
If you’ve engaged the services of a financial planner and can’t remember the last time you spoke to or heard from them, now is the time to pick up the phone. There might be threats to avoid or opportunities to explore, especially considering current political and economic uncertainties. There’s nothing wrong with checking in; as planners, we are here to offer reassurance and help secure your financial future.
Please note: A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.