The value of investments and any income from them can fall and you may get back less than you invested.

Why you need a financial MOT


Just like your 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 once a year as a matter of course (and more often if necessary), and discretionary management clients have their portfolios reviewed every 12-18 months – although they are monitored on a daily basis. But for those who have a more hands on role in managing their finances, here are some tips to ensure you keep everything running smoothly.

Bear in mind, however, that 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.

Overall, however, it is a matter of ensuring that your portfolio still reflects your attitude to risk, your time horizon, and your strategic goals.

Surviving the sandwich generation

Whether it is nursery and childcare costs, school-fees planning, university fees, helping your kids with a house deposit or a first car purchase, it is all a drain on the family finances. At the same time, you may very well find yourself caring for elderly relatives whose health may be deteriorating – it is an increasingly common demographic phenomenon and has been coined the “sandwich generation”.

Although members of this generation may have high incomes, this period provides a host of complex financial challenges that often have to be met simultaneously. The result is one of the most financially squeezed stages of our lives.

There are strategies to cope, and being prepared is one of them. But care costs for relatives often come out of the blue, so what do you need to prioritise, and how can you keep your own finances on track?

Discussing care for ageing relatives can be tricky, and it often helps to have a financial planner meet the whole family so that these emotionally-charged issues become easier to discuss. A financial plan to manage the expenses can be one of the most complex, so take advice without delay.

Check your insurance policies

Many people who have previously received some advice may have insurance policies such as income protection, life assurance and critical illness.

Rather than automatically renewing them each year, 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? You may need to increase or decrease your cover accordingly.

Most importantly of all, if you haven’t got life assurance or income protection, ask yourself why. If you are working and have dependents and a mortgage, how will they cope if you die or lose your job? Not having the appropriate financial protection may be a glaring omission in your plans.

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, set at £1,055,000 since 6 April 2018. 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 adviser 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. Have you opened an ISA for your children? That is worth up to £4,368 per child into a junior ISA.

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 £12,000 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.

Sell the dogs

All portfolios accumulate the occasional poor performer. The problem is, investors can be strangely emotional, becoming attached to holdings they have owned for some time, becoming reluctant to sell in the vain hope it will recover. But sometimes you just need to bite the bullet. A dog share can drag down your portfolio so try and be ruthless and admit to yourself when a share or fund needs to be ditched. If you are not sure, seek advice. But do not let dog shares or funds accumulate in your portfolio. It is a surprisingly easy mistake to make. Having an independent adviser assess your portfolio takes the emotion out and allows an objective analysis of your savings. Often an invaluable process.


The value of investments can fall and you may get back less than you invested. Please note that this document was prepared as a general guide only and does not constitute tax or legal advice. While we believe it to be correct at the time of writing, Brewin Dolphin is not a tax adviser and tax law is subject to frequent change. Tax treatment depends on your individual circumstances, therefore you should not rely on this information without seeking professional advice from a qualified tax adviser. Past performance is not a guide to future performance. No investment is suitable in all cases and if you have any doubts as to an investment’s suitability then you should contact us.

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