Top tips on what to consider when reviewing your finances

Brewin Dolphin's Paul Nurden

Brewin Dolphin's Paul Nurden - Credit: Archant

Circumstances changed? Paid off your mortgage? Savings not working efficiently? Paul Nurden, of financial planning and investment management firm Brewin Dolphin, recommends a fresh look at your finances

Much like a car, your finances need regular maintenance to ensure optimum performance. Even if you have a solid financial plan in place, it still needs to be updated from time to time to ensure it reflects any life changes.

Clients of Brewin Dolphin’s financial planning service have their arrangements reviewed at least annually, and client investment portfolios are continuously monitored to react to ever-changing markets.

However, you may want a review more quickly because your circumstances have changed, or you might want a steer on how you can help yourself. Below are some tips on what you might consider reviewing.

A holistic financial plan will have a lot of moving parts and variables to consider. It is the complex way in which these dovetail and complement each other that makes professional advice so important.

Rebalance your portfolio

A lot can happen in 12 months and events can mean that your investments may need to be revisited. Some might simply not be performing while others might be doing so well that it could be time to take profits; it is usually wise not to become over-exposed in a particular company or sector.

Most Read

Overall, however, it is a matter of ensuring that your portfolio still reflects your attitude to risk, your time horizon, and your strategic goals. A discussion with an investment manager may help clarify whether you need to adjust your holdings.

Is your income protected?

Many people may have insurance policies such as income protection, life assurance and critical illness.

Rather than automatically renewing the policies, check that the amount of income you are insuring is still appropriate. Have you had a pay rise? Have you increased your mortgage or have you paid the mortgage off? Any changes could mean you need to increase or decrease your cover accordingly.

Are your retirement savings on track?

One of the most common challenges is building a big enough retirement fund. This may mean topping up your pension as much as you are permitted each year, or switching funds altogether. However, for others, it may be a matter of taking action to ensure the pension fund does not breach the lifetime allowance, currently set at £1.03 million. Anything over that can be subject to tax of as much as 55%, so it is important to try to take preventative measures if possible. There are potential solutions but it is complex and advice is needed. Check your total pensions balance each year and check with an advisor to see if action is necessary.

More commonly, savers need to increase their contributions to maximise tax efficiency and hit their retirement targets. The annual allowance is currently set at £40,000 per year. This is the maximum amount you can contribute to your pension and still potentially receive tax relief at your marginal rate. Many people do not use this allowance in its entirety but it in the right circumstances it can be well worth utilising.

Boost pensions and savings by investing tax-efficiently

There is a huge array of government-sanctioned tax allowances targeted at savers, investors and families but many have to be actively claimed, requiring assertiveness on your part.

Have you used all your ISA allowance?

It is worth £20,000 this year and offers a great incentive to boost long-term saving with no income tax to pay on dividends or interest and gains being exempt from Capital Gains Tax.

Have you opened an ISA for your children?

That is worth up to £4,260 per child into a junior ISA with the same benefits as a standard ISA and may help them save towards house deposits in the future.

Are you utilising your capital gains tax allowance?

This can be complex, requiring you to sell a holding to realise a gain, and it is best to seek advice, but don’t let this valuable allowance go to waste; it exempts the first £11,700 in capital gains from tax this year.

You can also ensure your loved ones are given a head start by gifting money to them each year, and this has the added effect of reducing your estate when calculating inheritance tax. Using all of your gifting allowances should probably be part of your annual financial calendar.

How Brewin Dolphin can help

At Brewin Dolphin we specialise in building achievable financial plans so that you can concentrate on enjoying life, knowing that your future is in safe hands. If you would like to review an existing plan with us, or would like talk about becoming a client, contact Paul Nurden, Head of Office, Cheltenham on 01242 577677 or