When you find a financial product that works for you, you may stick with it because it’s comfortable and it covers everything you need in that realm.
However, what happens when you unswervingly stick with the same product for 10 years? We find out what the risks of your loyalty are and how it can cost you in the long run.
Tip: Have a look at our financial calculators to see whether you could pay less.
The risks of unconditional loyalty
According to Mike Wood, director of wealth at the Apio Group, when you stick with a product for 10 years, and don’t undergo reassessment, there are three main risks:
1. Not keeping up with your personal needs
Your needs, goals and financial position are likely to change over time. Failing to review these changes, and sticking with the same product that was right for you 10 years ago, may result in you having a product that’s unsuitable for your current position in life.
Make sure you regularly assess your financial circumstances to ensure your financial products are still relevant today.
2. Not adjusting your beneficiaries
Keeping your beneficiary nominations up to date is another vital part of the review process. Over time your beneficiary nomination may need to change and be updated for several reasons.
Failing to update your beneficiaries could result in either a person who is no longer part of your life receiving your benefits, or it can result in higher executor fees when winding up your estate.
3. Not considering the changing economy’s impact on your products
Economic changes also be an important reason to revisit and review your current products. You should make sure your current plan is still the most appropriate option for your goals and needs.
Changes in inflation, increasing levels of unemployment, slow growth and risky forecasts, changes in tax laws, changes in policy rules, and more, all create a strong case for reviewing your current products.
Reach out to a financial adviser to assist you with assessing your products. Remember, it’s not just the wealthy who make use of financial advisers.
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