When should you seek a financial health check?

User Written by Trey Archer on July 24, 2016.

When should you seek a financial health check?

When it comes to our savings, many of us spend a lot of time deciding where to invest our money, but then tend push it to the back of our minds and blindly hope that our earnings will miraculously meet all our future financial needs. Given this is money we will be depending on for a happy and secure retirement, this doesn’t make sense.

While I wouldn’t advocate obsessively checking the value of your portfolio on a daily basis, there are certain circumstances in which I feel a financial health check is important:

1. When your situation changes

Major life events often call for a rethink of your investment strategy. Getting married or divorced, having a child, receiving a major salary increase – these are all events that will drastically change your financial needs and making you reassess your financial strategy as soon as possible. Areas you will need to look at include rethinking your monthly savings, reassessing life insurance requirements, and redrafting your will.

2. If you think you are no longer on track to reach your financial goals

Once I have analyzed a client's financial needs, my conclusion usually goes something like this: "You need to invest X amount of dollars from now until retirement to reach your retirement goal." In a perfect world, you invest that amount then never have to worry about it again. In our not so perfect world, you probably need to make adjustments as you get closer to your retirement age.

3. If you are unhappy with performance

If you weren’t happy with a diagnosis from your doctor, would you hesitate to seek a second opinion? After all, your health is probably your most valuable asset. But what about your financial assets? Why treat them any differently? If you are not happy with your fund performance or aren’t getting regular updates from your advisor, then it might be time to seek a second opinion to see if if you can do better.

4. If you are worried about performance

This is a particularly pertinent point in this year of extreme market volatility. Most investors are feeling more than a little jittery at the moment and they are not being reassured by sensationalist headlines of the post-Brexit vote $2tn of stock market losses. However, when you drill down into the detail, many find that they have only the vaguest idea how their investments will be affected. If you are worried, it is best to seek the advice of a professional financial advisor who can help you review your portfolio, analyze its weaknesses and readjust your asset allocation accordingly (if required).

5. At least twice a year

Even if you are confident that your investments are doing what they should to meet your financial goals, I would recommend a health check with your financial adviser at least once a year. While you want to avoid knee-jerk reactions to one bad quarter, you may need to rebalance your assets if absolute returns have fallen over a sustained period or if your funds have underperformed compared to their benchmarks and comparable funds.

If you’re overdue for a financial health check and would like to work with an experienced and professional financial adviser who understands the issues facing expats in Asia, feel free to get in touch. I’d be more than happy to help. You can email me at trey.archer@infinitysolutions.com, or call me at +86 138 1620 7274.

Trey Archer

Trey Archer

Posted on July 24, 2016 in Financial Planning.