In the 10X Investments Retirement Reality Report 2023/2024, based on the 2023 Brand Atlas survey, 29% of respondents over 50 who had a retirement plan said it was probably or definitely not on track. It is also around this stage of life that Hercu Pienaar, Director at Aurora Capital SA, says older financial arrangements often begin to show whether they still fit.
Clients in their fifties are typically five to 15 years from retirement. By then, a plan put in place several years earlier may still contain sensible decisions, but the assumptions behind it may have shifted as income, responsibilities, health, and priorities changed.
For Pienaar, that is where financial renewal becomes useful. It is less about starting again than checking whether the plan remains relevant.
“Financial renewal is really about dusting off the plan. It is not about major changes, but rather confirming that it is still relevant and making an adjustment or tweak where necessary,” he says.
A regular review can catch change earlier
Pienaar believes financial plans should preferably be reviewed every year, even when nothing significant appears to have happened. An annual review gives the client and adviser an opportunity to revisit the assumptions behind the plan before a major life event forces the issue.
Major life changes are usually a good reason to review the plan. Marriage, divorce, the loss of a partner, or a new child can change the financial picture quite quickly, while changes in income, health, or employment may alter what the client needs from the plan.
The important point is not simply that the event happened. It is what has changed financially because of it. A different income may alter what the household can reasonably afford, while changes in family responsibilities can affect the provisions put in place several years earlier. What once sat further down the list of priorities may now be more pressing.
That is why Pienaar does not see a review as a standard exercise that should produce the same result every year. In some years, the existing plan may still fit comfortably. In others, a change in circumstances can justify looking more closely at part of it.
The same five years can look very different at 40 and 60
Life stage becomes particularly important when a financial plan has been left untouched for several years. Pienaar uses a simple comparison. Someone who last reviewed their planning at 35 and returns at 40 is having a very different conversation from someone who reaches 60 after last looking closely at their finances in their fifties.
The difference becomes more important as retirement gets closer. Someone in their sixties has less time to deal with gaps that may have been easier to address gradually a few years earlier, which is why an older plan deserves a closer look at that stage.
This helps explain why Pienaar so often sees older arrangements becoming less suitable when clients reach their fifties. It does not necessarily mean the original plan was poor. It may have been entirely appropriate for the circumstances at the time and simply failed to keep pace with the life around it.
This distinction is important because it shifts the purpose of the review away from finding fault with previous decisions. The adviser and client are instead looking at whether those decisions still belong in the plan in their current form.
A review should test the plan rather than the products
When someone has not reviewed their broader financial position for a few years, Pienaar says age and life stage should shape the conversation. The fundamentals, however, remain much the same.
He starts by assessing whether the important financial risks are adequately covered. The conversation also needs to consider what the client is likely to need over different periods of their life and what they are trying to achieve. Existing provision can then be assessed against that picture so that any genuine gaps become clearer and priorities can be set.
This gives the review a practical purpose. It is not simply a discussion of whether an existing product is old or whether a newer one is available. An arrangement that has been in place for years may still be doing exactly what the client needs it to do. Equally, something that once fitted well may no longer deserve the same priority because the client’s circumstances have moved on.
Pienaar says any proposed change should pass a fairly simple test. It needs to be realistic and sustainable for the person who has to live with it. If the recommendation cannot be maintained, or does not reflect the client’s actual financial position, changing the plan does not necessarily improve it.
That also places affordability back into the conversation. A financial plan may identify several areas that could be strengthened, but most households have limits on what they can commit at any given point. The review therefore has to help establish what requires attention now and what can reasonably be dealt with over time.
The bigger risk may be leaving the plan untouched
Pienaar believes unnecessary tinkering is less common than people might think. His concern is almost the opposite.
“In my view, it seldom happens that people do something new simply for the sake of it. Sadly, many people still view financial planning as a necessary evil rather than something essential,” he says.
That attitude can leave a plan untouched for years. By the time it is reviewed again, the client may be earning differently, carrying different responsibilities and be much closer to retirement than when the plan was first put in place.
The danger is that familiarity can start to look like suitability. A client may have held an arrangement for years without ever stopping to ask whether the original reason for having it still applies.
This is also why a review that produces no major change is not a wasted exercise. There is a meaningful difference between leaving a plan alone because nobody has looked at it and keeping it in place after checking that it still reflects the client’s circumstances.
Where the review confirms that the existing arrangements remain appropriate, the client has at least tested the underlying assumptions. Where something no longer fits, there is a clearer basis for deciding what should be adjusted and what can stay as it is.
For Pienaar, that is what financial renewal should achieve. It should bring the plan back into the context of the client’s life today, rather than allowing decisions made several years ago to continue simply because they have not yet caused an obvious problem.