Did you know Financial Planners spend most of their time conducting their client Annual Reviews?
A review meeting is an important aspect of a financial plan as it offers the opportunity to check the client’s current circumstances and update their plans. If the annual review is not conducted, there is a fear of the original financial plan becoming out of date.
There is also a requirement to check ongoing suitability of all advice provided to your clients and Annual Reviews must now take place at least annually.
Here are some tips for conducting a meaningful client financial review.
Personal Situation and Lifestyle/Financial Goal Changes
As part of the Annual Review, Financial Planners do need to review the client’s portfolio(s) and how this is doing compared to their goals and objectives.
However, Financial Planners need to review any changes in their client’s circumstances including changes in their attitudes towards risk to determine if that may impact the financial plan you have put in place for them. 12 months is a long time and a lot can change such as life events and other personal circumstances.
Your clients’ finances may have changed and their attitudes towards their finances since the last review was conducted. Therefore, it is important that these areas are discussed so you can make any necessary changes to the financial plan.
The Annual Review is also a good time to discuss any changes in legislation that may have occurred and impact your clients’ plans.
Rebalancing
You will need to review whether the client’s portfolio and asset allocation is still in line with their original attitude to risk and if not to discuss a rebalance back to the original asset allocation.
This is a good time to also discuss if the client’s original asset allocation and risk has changed since their last review.
Tax Allowances & Estate Planning
Annual reviews are a good time to discuss if your client requires any tax planning. This can include (but not limited to) things like maximising Pension and ISA contributions and other areas that the client may require tax planning on. It is important to review your client’s annual income as changes here may affect their financial plans, especially if there have been changes in legislation too.
This is the ideal time to consider client’s wishes on death and ensure these are up to date, including nominations of Pensions and Wills/Power of Attorney’s, if applicable. Consider their Inheritance Tax situation and whether there may be any potential IHT liability on their estates.
Retirement
For clients in the accumulation stage, the annual review is a good time to check if they are on track to achieving their retirement objectives.
For those nearing decumulation stage, have you discussed when they wish to retire, ideal income in retirement, will they continue some part-time work whilst in retirement?
Protection
Now is a good time to re-visit the area of protection if you haven’t done so already. Do your clients have adequate protection in place, do you need to discuss this area with them?
Set Goals for the Next Year
Once you have reviewed the current circumstances, the portfolio and products, you can work together to set goals for the client for the upcoming year. This is an important step and should be discussed with clients to see how you can adjust their plans accordingly.
Conclusion
Taking the above points into consideration allows the financial adviser to review the current client financial plans and original advice provided and assess whether they remain suitable for them.
The Annual Review allows the client to get a comprehensive view of whether they are on track with their financial plans. The adviser gains insights into the client’s current circumstances and any changes in their attitudes to ensure their plans will achieve the financial goals they originally set out to.