An annual review of your financial affairs

December 2020

An annual review of your financial affairs

To say that this year has been a roller coaster may be an understatement. We had a new government take office, Brexit, lockdown, and crazy market fluctuations to name just the biggest changes. The end of the year is usually when we take stock of how things have gone and whether we met the goals we set ourselves last January. It gives us a chance to start the new year afresh and set ourselves some new objectives. In this final instalment for 2020, we look at why an annual financial review is important. If you would like some help with yours, one of our independent financial advisers would be happy to help. Find us on to make an appointment.

Why is a financial review important?

Markets fluctuate on a daily basis. New, often cheaper, products are released by financial providers regularly. Tax rates and allowances are tweaked every year. Together this means that the decisions you made 12 months ago may not be giving you the best returns today. Loyalty to a particular provider or product may not be in your best interests. It is important, therefore, to review your financial situation and make your own tweaks where necessary.

How often you should review your finances

We recommend you undertake an annual review as a minimum. If there are particular changes to your circumstances during the year, it’s a good idea to do a mini review as well. For example, if you got married or divorced, had children, came into an inheritance or lost a job. Similarly, if a fixed-term product is due to come to an end, start looking around or talk to your independent financial adviser about the latest offers before it runs out.

What should a review look at?

An annual review should consider your finances as a whole, in the context of your family and work situation. Its purpose is to check that you are on track to meet the goals you set yourself. It also helps you work out whether those goals are still valid and guide you on how to meet any new ones you set. We recommend doing the following:

  • Income/outgoings status. What are your overall finances like? Are you able to pay off debts and put some money away in savings? Do you know what the outstanding balance is on your credit cards? Are you clear on what your income is and where it’s coming from? This could be from a salary, pension, or investment.
  • Pension. Is your pension on track to deliver what you need when you retire? If not, what changes can you make to either make up for any shortfall or to improve the returns next year? Are you in a position to take on more risk, or should you be consolidating your pension pots? Is your portfolio diversified enough to weather any future storms?
  • Look at how your investments have performed over the past 12 months. Those could include shares and bonds that you hold, or property that you bought as an investment – e.g. a buy-to-let property or a holiday home you rent out. Have your investments made a return or a loss? How have they fared when you take inflation into account?
  • Check that the interest rate on your savings account is the best you can get. If your money is not tied up in a fixed-term savings plan, consider whether it’s worth moving to a savings account with a higher interest rate. Similarly, if you don’t need access to your savings, a fixed-term product may give you a better return.
  • Tax efficiency. Are you making the most of the tax breaks and efficiencies available to you? There is a wide variety of ISAs on the market that may help you be more tax efficient with your savings. If you are planning to sell a second property, Capital Gains Tax may apply, and the timing of the sale may help to reduce your tax bill. Finally, have you considered Inheritance Tax and put a plan in place to reduce that liability when the time comes?

Help is at hand

An annual financial review can feel overwhelming if you are new to it or have a lot to consider. Don’t be tempted to put it off! The sooner you tackle it and make the necessary changes, the harder your finances will work for you. For help and advice with an annual review, talk to one of our Plutus Wealth independent financial advisers. Talk to us on 020 7871 5200 or drop us a line at to make an appointment. We’ll help you make sure your finances are on track.


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