Why A Financial MOT Is A Good Idea:

My car recently went into the garage for the dreaded MOT. As it did so, it struck me that this annual check to ensure roadworthiness (and that my vehicle remained capable of getting me safely where I needed to go) bears a striking similarity to financial planning. Just like your car, your finances need regular maintenance to ensure maximum performance. Life changes! So, it’s inevitable that even the most robust financial plans will need tweaking from time to time. And that is why an annual ‘financial MOT’ is so important. 

At Lewis Brownlee Financial Services, we monitor our client portfolios’ regularly. That way, we can be positioned to benefit from or avoid any changes in the outside world that might impact their performance. We are also only a phone call away should any queries arise. So, we can easily absorb life changes into your plan in real time. 

But, we also insist on a check-in point with each and every client, every single year. And, it’s this review that is like a financial MOT. So much so, in fact, that we’ve even depicted it as such on our website Process page – and if you’re not familiar with that, please do check it out!

A financial MOT is a chance to catch up with clients and find out how life has treated them over the last year.  In a way, it’s an extra safety-catch that allows us to ensure nothing falls through the net. It’s a point from which we can analyse a client’s ‘current’ situation. We can then see whether any tweaks are needed to keep them on track for their future financial goals.

So, what does a financial MOT include?

There is a specific list of criteria we check off when conducting our financial MOTs:

financial MOT - life changes
What’s changed over the last year?

This is basically the question that governs whether your portfolio needs rebalancing. A lot can happen over the course of a year. So, your investments might need realigning to better suit where you are in the here and now. Some of your investments might not be performing as well as we would like.

Meanwhile, others might be doing so well that it could be time to enjoy some profits. Overall, we’ll be looking to ensure that your portfolio is still aligned to where you are ‘now.’ So, does it still reflect your attitude to risk? Is it still in line with your time horizon? Are the goals it was designed to meet still the same?

sandwich generation
How are you catering for the ‘sandwich generation?’

As we mentioned earlier, life changes. All sorts of things can crop up that can encroach on your finances and potentially throw your goals off course. So, during your financial MOT, we’ll be checking what ‘extras’ have appeared (or are on the horizon) so that your finances are not blind-sided by them. It might be that nursery and childcare costs are now looming large or that the grandchildren have some expensive school/university fees you’d like to help out with.

These can all be a drain on the family finances if you don’t plan and prepare for them. Similarly, you might need to factor in caring for elderly relatives whose health is on the decline. This is an increasingly common scenario that has been dubbed the ‘sandwich generation.’ So, at your financial MOT, we’ll be wanting a heads-up on catering requirements around the corner!

financial MOT - insurance
Are your insurance policies all up together?

If you’ve had financial advice before, the chances are that you will have some insurance policies in place. The usual candidates are income protection, life assurance and critical illness. So, at a financial MOT, we’ll be checking that what you have in place is still adequate for your requirement. If you’ve had a pay-rise or increased your mortgage (maybe you’ve even paid the mortgage off…), you may need to increase or decrease your cover accordingly.

Most importantly, for those of you who haven’t got life assurance or income protection in place, we’ll be wanting to ensure we put a plan in place. Not having the appropriate financial protection could have serious ramifications for your future financial well-being.

financial MOT - keeping track
Checking whether your retirement savings are on track?

Usually, one of the primary concerns people have regarding their finances is over whether they will have enough money when they come to retire. So, at your financial MOT, we’ll be checking your current state of play to see whether any changes to be made to keep you on track.

It might be that you need to top up your pension as much as you’re allowed each year. It might mean changing funds altogether. Then again, perhaps you’re in the situation where you need to ensure your pension fund doesn’t breach the lifetime allowance, lest you become subject to some harsh tax implications. Whatever your situation, we’ll be wanting to make sure your finances are as tax-efficient as possible!

financial MOT - take advantage
Making sure you take advantage where you can

When it comes to tax, there are many permitted tax allowances, but you have to actively claim them. So, at your financial MOT, we’ll be double-checking that you’ve used your ISA allowance up. We’ll also be keen to know whether you’ve opened a Junior ISA for your children and to check you’re using your £12,300 capital gains tax exemption.

It might be that you are now in a position where you want to help out the younger generations by gifting them money each year, which has a hidden bonus of reducing your estate for inheritance tax purposes. Whatever your current hopes, we’ll be wanting to know what they are so that we can best work them into your plan so that they have the best possible financial outcome.

financial MOT - wheat from the chaff
Sorting the wheat from the chaff

Your financial MOT is your chance to see how your entire portfolio is performing. So, we’ll be able to look at your investments and highlight any poor performers. All portfolios have these from time to time. But, from experience, investors have a tendency to become attached to holdings they have owned for some time. So, your financial MOT is a chance to have us, as experts, shine a spotlight on these and to help you see how better the funds behind them might be placed. 

So, if you have been thinking about sorting out some financial planning, this is a gentle reminder of the many benefits it has. We can take care of the hard work for you, prompting you to action exactly when it is needed. You can rest assured that for you, it’s a case of sorting it once – engaging an adviser. Then it’s up to us to do the continual monitoring, assessing and urging for change that is required to keep your finances in optimum condition. 

You can also be as involved in your finances as you like. Some people like to have a lot of control and to know every detail; others prefer to tell us just to get on with it. Whatever your style, we can fit in with you. So, don’t be afraid to pick up the phone – it doesn’t cost anything to find out how we can help, and there really is everything to gain from the peace of mind knowing that your finances are in expert, financial hands.

Written by Chris Page

Chris is an experienced financial service professional who joined the business in 2013, as a result of his hard work and dedication he was made a director of the firm late 2014.

Want to Speak to a Financial Adviser?

As always, if you would like to speak to one of our reputable, independent financial advisers, please do call us on 01243 767 469. Alternatively, you can email us from our contact page, and an adviser will be in touch.