DAILY FINANCIAL TIP – DAY 25 – FINANCIAL REVIEWS

These daily financial tips are designed to be short ideas covering different aspects of family and business finances. They are short pieces intended to provide information to enable individuals, families and businesses to make informed financial decisions. Not all tips will apply to every situation, but over the course of a year, most financial topics will be covered. Check in regularly and share with friends and associates.
As the year end draws near and excitement builds to the possibilities of the New Year, many of us are reflecting on our past year and planning resolutions for the New Year. I am often asked by clients how frequently they should review their insurance coverages. Those with investments will shortly be having their mailboxes stuffed with year-end investment statements and tax slips. It can be overwhelming. Many will file statements away unopened to be reviewed when ‘time’ permits.
Those with advisors feel there is little to no need to review statements or their coverages as they figure their advisor will contact them when anything important arises. This is not entirely accurate. While many advisors will have client contact and call programs, these are often based on the advisor schedules, based on client holdings (those with larger holdings will receive more frequent contact). Advisors don’t necessarily know or are aware of changes in clients professional, family or financial circumstances as they occur.
Advisors who have taken the time to understand clients current and anticipated circumstances and needs will structure plans that should weather short term changes, but they can’t anticipate all changes. At the end of the day, you work hard for your money and savings, you should at minimum review your investment and insurance plans for changes to ensure they are matching your needs and the plan laid out. If unsure of what you see on your statements, if there have been changes in your circumstances, or the plans no longer match your needs, contact your advisor to schedule a review and have questions answered. The sooner this is done, the sooner you can make adjustments to ensure future success.
So how frequently should one review their insurance and investment coverages? The answer is different for each. As investments are often subject to daily/regular fluctuations in value due to changes in market changes, make it a habit of opening all your investment statements as you receive them to at least have a cursory review/look. At least annually do a more thorough review of all your investments to ensure they are meeting your needs and goals. Whenever there are significant changes in your family or professional circumstances, it is best to arrange a review with your financial advisor to ensure your plans adjust accordingly. Ie. Marriage, divorce, having children, job promotions, job loss, receiving gifts or inheritance.
Insurance plans don’t necessarily have to be reviewed with the same degree of regularity as investments as they don’t have the same degree of volatility or change. As with investments, whenever there’s a change in personal or professional circumstances as identified above, insurance coverages should be reviewed to ensure the amount of insurance and the type of insurance remains relevant and keeps pace with your lifestyle. When insurance coverage is taken out, perhaps future changes in terms of adding coverage, or extending coverage may form part of the plan, it is best to input a diary notation in your calendar to ensure this is not forgotten over time. Often policies will have conversion privileges which offer the option to take enhanced coverage in future.
Everyone’s situation and circumstances are different. Find a process and time that works best for you to review your investment and financial holdings to ensure they match your current needs. I find the Christmas and New Years holiday period is a good time for me as I am not as busy with clients. I am often reflecting of the past year and planning on the New Year, so incorporating reviewing my insurance and investment holdings is part of this process. Ignorance is not bliss, so take the time to ensure your money is working for you.
Share these ideas with friends and family and come back to check out daily financial tips and ideas. If there are subjects you wish covered or questions, please email me and I’ll include them in future posts.