3 ways cashflow modelling can support the work of a financial coach

, 20 October 2020

A financial coach seeks to improve a client’s relationship with their money. Here’s how cashflow modelling can support this modern approach to planning.

We’ve previously looked at how financial planners are increasingly taking on the role of ‘life coach’. Many planners are also evolving their range of services and now act as a ‘financial coach’ to their clients.

While some financial coaches simply get paid for their time, and do not provide financial advice, regulated financial planners can go one step further. Not only are they there to help clients establish your interests and goals and work towards them, but they can also use their wide knowledge and experience to make recommendations.

Financial coaching is about improving a client’s relationship with money through coaching – and cashflow modelling can play an important role in this process.

Improve a client’s relationship with money

According to a 2019 survey, money is the biggest cause of stress for employed adults. Dealing with financial issues, both practically and psychologically, can be a huge struggle for many people. Despite this, there is very little help available.

As a society, we’re taught to value money and understand its importance, but we get little education about how to understand our relationship with it.

Financial coaching is designed to help clients to improve their relationship with money. It deals with common questions such as:

  • Do you find it hard to budget? Would you like to manage your money better?
  • Do you struggle to save? Would you like to save more?
  • Do you worry about debt, or paying your debts?
  • Does thinking about money make you stressed or anxious?
  • Do money issues cause problems in your relationship?
  • Do you find it hard to talk about money – perhaps with your partner?
  • Do you worry about passing on wealth to your children or grandchildren?
  • Do you want to be able to talk to your children about money?
  • Do you want to take more control over your life?

It’s well known that financial planning adds more value and helps clients get more from the process than simple, transactional financial advice.

Financial coaches go a step further than even some financial planners. They help clients to explore their ambitions and goals and show them how they could achieve these aspirations if they managed their money more effectively.

A financial coach helps a client to take ownership of their plan and to stick to it. And, they can help clients to identify the psychological biases that affect them, and to recognise the moments where someone may make a choice which isn’t in your best interests.

Cashflow modelling can support financial coaching

By working with clients to improve their relationship with money, they will enjoy better outcomes.

And, it follows that cashflow modelling can play an important part in good quality financial coaching. If you consider the questions above that a financial coach seeks to answer, creating a lifetime wealth forecast can support these aims.

Show clients what their financial future will look like

The use of graphs in cashflow modelling means that clients have a visual representation of what the future could look like and whether they can meet their goals. This can be incredibly powerful.

For example, they can see that spending on large items such as a holiday home doesn’t end up bankrupting them because they haven’t considered the ongoing associated costs.

It also shows clients how passing wealth to future generations impacts their own position, empowering them to make decisions with confidence.

Model ‘what if?’ scenarios

Many clients have a tricky relationship with money because they fear what might happen in the future. How often have you heard ‘have I got enough?’ or ‘will I have enough?’?

Cashflow modelling can show a client how downsizing their home, making a gift to family, or losing their partner’s pension should they die first, will impact on their wealth and lifestyle.

While clients can’t always predict what will happen, cashflow modelling can help them prepare. This removes a lot of the uncertainty and stress associated with money, allowing clients to plan more effectively.

Promote wellbeing

Removing financial stress improves a client’s overall wellbeing. So, if a financial coach can help a client to take control of their money, they can help them reduce one of their main worries.

Cashflow modelling enables a financial coach to create, compare and illustrate unlimited scenarios using flexible graph or table formats, planning effectively for all clients, at every level.

This planning promotes mental wellbeing, as clients are not stressed about their finances.

Get in touch
If you’re a financial coach, cashflow modelling can add real value. To chat to one of us about the benefits of cashflow modelling, email sales@i4C.technology or call 020 3308 9448.

You can also access a free 30 day trial of i4C by clicking here.

This article was written by Carly Robbins, Client Cashflow Solutions Consultant at i4C.