Over time, our investment aspirations and acceptable risk exposure will inevitably change, impacted by many variables and scenarios.
If you haven’t reviewed your portfolio (or can’t remember the last time you did), it’s highly advisable that you do so soonest. Leaving a portfolio to run unchecked can be disastrous, with the potential to lose value, miss out on opportunities, or increase your tax exposure unnecessarily.
Let us explain how an investment portfolio review works and why it’s an important way to ensure your assets and wealth are working hard – aligned with your personal goals and expectations.
What is involved in an Investment Portfolio Review
The review process runs through several steps, examining your existing investments, identifying weaknesses, and providing recommendations to help boost performance to achieve your financial targets.
Reviews should include a consultation process, where one of our skilled consultants will discuss:
- Any changes to your circumstances, objectives, or reasons for investing.
- How your attitude to risk may have changed since your last review.
- The performance of your investments, and whether this is as anticipated.
- Whether your portfolio requires diversification or rebalancing.
- The costs of your investments, and whether they seem appropriate.
- Relevant tax rules and allowances that you could be taking advantage of.
Each phase is equally important to ensure we have clear oversight of your requirements.
Many expatriates find that their relocation constitutes a major change in circumstance, so a professional review will likely generate actionable advice to improve your prospects and returns.
Changing Investment Portfolio Risk Exposure
A key component of the review process is to assess your risk exposure and whether you are comfortable with this. It’s also worth remembering that external risks such as economic, political or sector-specific changes may exacerbate your risk exposure, even if your stance hasn’t changed.
Risk assessment should be a regular part of competent investment portfolio management, evaluating when stock market positions or long-term plans dictate a change in investment strategy to match your objectives.
Where risks have risen, and are no longer acceptable, your adviser can suggest changes, or low-risk alternatives to bring your portfolio back to a suitable position.
How Often You Should Review Your Investment Portfolio
There isn’t an exact timeframe, and we’d suggest reviewing your investment portfolio at any point when you have experienced a change in circumstances or financial income.
Otherwise, the best practice is to review your funds once or twice a year, finding the balance between maintaining control over your portfolio without spending excessive time reassessing investments that are performing well.
Your wealth manager should also be proactive about spotting market fluctuations that have a bearing on your finances and invite you to attend a portfolio review if they believe an exciting opportunity will be of interest.
Why Portfolio Reviews Are Important for Expats
As a specialist expatriate wealth management team with offices worldwide, Chase Buchanan has seen first-hand why a lack of oversight can be detrimental to your financial security.
One of the core reasons to schedule a review is because your financial situation has varied, which includes relocation to a new country, with all the resultant outcomes:
- Budgeting for education costs and private tuition.
- Planning for estate management and inheritance tax.
- Varying income or pension savings products.
- Dealing with different tax regimes and wealth or property taxation.
Your financial circumstances directly affect the optimal structure of your investment portfolio, so it’s important to assess any necessary changes before they have a negative consequence.
The Chase Buchanan publication, Six Tips to Prevent an Investment Portfolio Plateau, also provides further context about the importance of reviewing your assets as a foreign national living overseas.
What is the Outcome of a Portfolio Review?
An investment portfolio review is an opportunity to understand where your investments could be strengthened, diversified or reinforced to reduce your tax liabilities, protect your interests and return healthier returns. In many cases, that means rebalancing or diversifying across asset classes, jurisdictions or industries.
Below we’ll explain some of these potential actions that our investment portfolio review may conclude are necessary.
Rebalancing a Portfolio
Your investment portfolio will be weighted in certain directions. For example, you might have a blend of 50% shares and 50% bonds as a theoretical illustration.
The concept of rebalancing means looking at how risky your assets are, how that corresponds to your desired exposure, and where your portfolio is not correctly weighted to reach the ideal results. Rebalancing might mean redirecting regular savings to under-utilised investment opportunities, selling investments to refinance poor performance in other areas, or adjusting exposure to bring your portfolio back into an even balance.
Addressing Investment Portfolio Costs
Investment reviews don’t solely look at risk and returns but also consider the cost of maintaining your portfolio. Nobody wishes to pay more than they should, so the relative investment costs will indicate whether you are receiving good value for your professional services.
Although we’d not recommend regularly switching investment products to obtain a lower cost (because the administrative charges would normally exceed the savings), you need to be conscious of the expense linked to holding an investment product.
Please visit our guide, Are You Paying Too Much for Your Investment Portfolio, for further information about cost assessments.
Investigating Changes to Tax Rules and Allowances
Another fundamental aspect of a portfolio review is to consider tax treatments, allowances and rules, which may directly affect the performance of certain assets, particularly in a cross-border investment structure.
Tax efficiencies can profoundly impact your net returns, so remaining up to date with relevant changes in either your domiciliary country or your home country overseas is important for long-term wealth protection.
Schedule an Expert Investment Portfolio Review
If you’re concerned that your portfolio hasn’t been reviewed for some time, wish to assess whether your assets remain suitable, or require advice from an experienced global wealth management adviser, please contact Chase Buchanan.
Our capable teams conduct regular investment reviews to ensure your portfolio is well balanced, with defined risks and outcomes that meet your requirements.
*Information correct as of April 2022