So it is with any financial plan.
In 2006 the Labour Government implemented what was referred to as Pension Simplification. Working with clients at the time this was a major change in legislation and the introduction of the concepts of Lifetime Allowance and Annual Allowance meant revisiting how clients were planning towards their retirement. Over the last 18 years the Lifetime Allowance has increased, decreased, increased again and been removed; the Annual Allowance has decreased, increased had a tapering system introduced which itself has changed three times. Any plan which we worked on in 2006 would have large elements that just wouldn’t work today.
A plan can only be constructed based on what is known at the time, including legislation, taxation and personal circumstances. Changes to legislation and taxation may often have little material impact on the broad strategy of any long term cashflow plan however, a lot of long term planning is about capturing small benefits, but doing so every year so that the small benefits compound. Changes to personal circumstances and objectives may not affect the technical elements of a plan but often have a major impact on the broad strategy.
We therefore believe that agreeing a structured process for review is vital to the success of any long term plan.
Although one could just leave things until you think you need to check in on how things are going, our experience is that this leaves too much to chance and the point at which someone checks in is when either something has gone wrong or they’ve already changed tack and suddenly thought maybe the plan needs to be reviewed as well. Having a disciplined review structure is like a regular dental check up, hopefully things are all going smoothly but if something needs doing it is easier to pick this up before it becomes a problem.
Minor reviews can be done as a desk-based process, checking if rebalance is required, whether cash levels remain appropriate, looking to use ISA allowances or checking on potential to use CGT allowances. Even here however we will always check in with you to ask if there have been any changes or if changes are planned and whether you have things coming up in the short term for which you need money. It’s our way of helping you to remember to let us know if things might need to change.
Full reviews are primarily about you, your goals, your plan and making sure that thigs are still on track. Yes, what any investments have done is important, because that is part of the plan and it is normally something that is important to you, but more important is what you have done, what you want to do and what might be different. So we will meet, either in person or online at least once a year.