Cashflow modelling as a tool in protection planning

, 3 July 2020

Cashflow modelling is increasingly being used as a tool for planning protection with clients.

The underinsurance of UK families is well documented and widely discussed. Royal London’s State of the Protection Nation research, published last year, confirms that consumers still don’t fully understand their own protection needs.

But i4C users are increasingly bucking this trend – using technology to help clients recognise how protection should underpin any financial plan. Our users are overcoming the challenges they historically faced, such as:

  • Difficulty proving the sum assured required
  • Hard to demonstrate the impact of ‘Do Something’ vs ‘Do Nothing’
  • Tough to truly engage clients in the conversation
  • Lack of client commitment
  • “I can’t afford those premiums”.

We’re experiencing increasing numbers of mortgage and protection advisers subscribing for i4C licences. Despite the misconception that cashflow modelling software is only a tool for wealth planners.

These advisers are looking for a tool that will help them overcome the challenges above as well as being comprehensive but easy to use.

  • They use the Goal Seek Wizard to quantify the sums assured required in the event of death or illness.
  • They want sensible visuals, facts and figures.
  • Clients engage in these real-time conversations because they can see the implications associated with their decisions.
  • They create scenarios to demonstrate the impact of doing something vs doing nothing.
  • Their commitment becomes tangible because of the emotional connection created.
  • Affordability is confirmed using scenarios.

Cashflow modelling is a tool for all advisers, regardless of specialism. There is real value in being able to focus a client on the bigger picture, helping them visualise “what would happen if”….. It’s simply not true that cashflow modelling will only benefit the wealthy.

Many of our user firms tell us that cashflow modelling should form part of the advice process for all clients, regardless of age or wealth. Irrespective of the advice they are seeking. The number of financial advisers using cashflow modelling software and clients benefitting is on the rise.

Which one?

When it comes to selecting the technology to use, the decision is not always straightforward. You need to find the perfect combination of cost, efficiency, ease of use, functionality and scalability. If you’re planning to use the tech live in a client meeting, it also needs to be easy to understand, engaging and produce sensible outputs.

A comprehensive and meaningful cashflow does not need to take hours to create.

The technology you use should aid efficiency rather than hinder it. We have made ease of use central to the design of i4C and our Goal Seek Wizards save you time by answering commonly asked questions.

Our Protection Wizard focuses on the impact of death or illness and can be used to initiate the conversations about protection.

Cashflow modelling is crucial in helping clients visualise your advice and make informed decisions, regardless of the complexity of their situation. The most important part of the relationship is to ensure the client is engaged and able to interact in the planning process.

This article was written by Rob Tedder, Client Cashflow Solutions Manager. It was first published in Professional Paraplanner.

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