5 reasons why an annual financial review is not optional

Life is full of unexpected detours, and an annual review of your financial plan is an opportunity to adjust your course if needed to ensure you remain on track to reach your destination. A new season, whether in nature or your life, is a good time to schedule an annual review with a financial adviser as the next step to a more secure and prosperous future.

A financial plan is like a map for a journey. You don’t just plot a route and never review it again. Weather changes, congested roads, or adding a new stopover may trigger a route change, which could impact the estimated time of arrival at your destination. Likewise, an annual check-in with a financial adviser is a proactive step that helps to identify potential risks, take advantage of new opportunities, and strengthen your financial outcomes, says Nel. 

Five key reasons why an annual financial review should be a non-negotiable part of your life.

• Life changes have financial consequences 

A financial plan must evolve with you; it must reflect your reality. In the last year, you may have bought a new car or home, gotten married, had a baby, changed jobs, or gotten divorced. Each of these life changes has an impact on your finances. 

To ensure your financial plan remains aligned with your reality, a financial adviser helps you to quantify the impact and adjust your strategy accordingly. 

• Changing market conditions  

Financial markets are always in motion, and with them, new investment products and regulations may emerge. Without an annual review, you could be holding onto underperforming assets or missing out on opportunities that better suit your new circumstances. 

By protecting your gains and mitigating potential losses, your financial adviser can rebalance your portfolio and ensure your investments remain aligned with your risk profile and financial goals.

• Remaining goal-oriented

Maybe you spent more than you planned on a holiday, or a sudden and unexpected expense threw your budget off. An annual review with a financial adviser is an opportunity to assess your progress against your personal goals, review and update your financial plan to get you back on track. In financial planning, as in life, regular accountability turns long-term aspirations into achievable realities.

• Planning for the unexpected 

Life is unpredictable. A sudden illness, job loss, or a family emergency can derail even the best-laid plans. Net says during an annual review, a financial adviser can help you determine if your emergency savings, income protection, and/or critical illness (dread disease) cover can help you emerge financially more resilient, rather than financially ruined, from such a setback.  

• Taking advantage of new opportunities 

As your career progresses and your income grows, new financial strategies become available. You could benefit from tax-efficient savings products, diversify your investment portfolio, or explore property investment opportunities. 

Here too, an annual review with your financial adviser identifies such opportunities, and helps you with structuring your finances to maximise wealth-building. 

Ultimately, an annual financial review is a powerful and empowering practice, even more so if your financial adviser understands you and your journey and is committed to helping you navigate it successfully. By regularly checking in, you are not reacting to change but proactively shaping your financial future.

* Nel is the head of financial planning and advice at Momentum.

PERSONAL FINANCE