How cash flow planning can help support referrals

12 July 2019

cash flow planning can help support referrals

The cash flow planning movement continues to gather pace.

The number of advisers using cash flow planning grows daily. The feedback from those using it interactively in client meetings is positive.

Clients engage with the visual outputs, their questions can be answered in real-time and they can clearly see the impact of their decisions.

Yet cash flow planning can have an even greater impact on your business. One of our users recently told us that over 70 per cent of their new business revenue now comes from referrals from professional introducers. Cash flow planning has made the difference.


The power of professional referrals

Referrals from professional introducers are powerful. Yet mutually beneficial relationships can be hard to establish and even harder to maintain.

Most financial planners we speak to believe that local accountants, corporate finance firms and solicitors could be referring more clients. Often, they cite that referrals are based on goodwill from individuals within each firm – it’s done on a ‘friendship’ basis.

Arguably, it’s becoming increasingly difficult for planners to differentiate their proposition from their rivals. So how do you ensure professional firms pick you to look after their trusted clients?

The use of cash flow planning doesn’t take away the need for hard graft. But it does make ‘selling’ your services easier.

Many individuals within the referring firm can find selling a third party uncomfortable. Selling a service enhancement isn’t selling, it’s adding value. No one should object to that.

For example, it’s easier for a solicitor to recommend a client seek financial planning services to support a divorce settlement, rather than seek help in investing the proceeds from an already agreed divorce. Providing supporting evidence about the settlement amount adds value for the client. It may help the law firm win more cases.

It also allows you to establish a relationship before the settlement is agreed. This process allows you to demonstrate your value and get client buy-in to the financial planning process. This lays the foundations for a lasting, mutually beneficial relationship.


Find an advocate

So how do you go about building this type of relationship?

One of the key tactics when developing either a strategic relationship or a joint proposition is to find an advocate within the partner business.

Walk them through the process. Show the power of cash flow planning and the value it can bring. As you’ll likely have experienced, the visual nature of cash flow planning helps to tell a story quicker than any report or text-heavy document.

Many of our users run cash flow planning sessions with private client lawyers looking at divorce and at Court of Protection cases. It’s then much easier for the lawyer to invite planners to attend future client meetings.

People love saving tax! Therefore it’s worth talking to professional connections’ clients about how they can benefit from income, capital gains and inheritance tax (IHT) savings.

Once those firms see the potential value that cash flow planning could bring to their business, you’ll see a rapid increase in the volume of referrals coming your way. The hope is this would come from not just one individual, but from across the business.


Corporate financiers

One of the best sources of introductions can be from corporate financiers, firms which are helping to facilitate the sale of businesses.

They tend to love cash flow planning, because it can serve to accelerate any mergers and acquisitions activity that’s in the pipeline, meaning they get their fees sooner.

Business valuations are often subjective. Sellers tend to pick their ‘magic number’ seemingly from thin air.

But this is like looking down a telescope the wrong way; the outcome is far from certain and while this approach could work in theory, the question is at what cost?

Cash flow planning puts science behind this number. A client who is looking to sell their business may realise they need less than they think, in which case, why turn down a current offer for a future sale that may never materialise, or drag out an offer that turns out to be time-limited?

Getting involved early also means that any potential IHT planning is considered before the business sale. A client who seeks advice once the sale has gone through may later find those tax planning opportunities are no longer available.


Employee benefits

Aside from helping owners sell their business, cash flow planning can play a role in supporting staff within those firms too.

Consider whether the firms you work with would benefit from offering financial ‘health checks’, via cashflow planning, to employees as part of their benefits package.

These could be used to highlight any areas which employees need to think about, or to potentially plug any gaps such as protection or increased pension contributions.

By collaborating with employee benefits providers, a simple cashflow could help employees start to engage with regular pension savings, and highlight whether they are saving enough for retirement.

For many, just knowing they will be okay, even in the bad times, can be life-changing. Advice on top of this can then make a material difference to the plan.

Developing strategic relationships doesn’t have to be an all-consuming and soul-destroying process, all for the ad-hoc referral.

If you can show the value that cashflow planning can add to a professional firm’s existing service, then you start to create a significant number of opportunities for referrals.


This article was written by James Calvert-Jones, Head of Product, i4C Technology for Nucleus Illuminate