How cashflow planning enables conversations

, 9 November 2020

In the month of Talk Money week, we look at how cashflow planning enables conversations, and gets clients opening up about their personal finances.

Every November, Talk Money Week encourages the UK to talk about money – from pocket money right through to pensions.

So, this month, our three-part series looks at how financial planners can encourage conversations about money. And, why this is important. Also how cashflow planning can enable these discussions.

Later, we’ll look at why financial planning as a couple is so important, the benefits of using cashflow live with clients, and the discussions this can enable.

In the first of our three-part Talk Money Week series, read about how cashflow can really help you to get clients to open up about their finances. And how it can encourage them to share their worries, hopes and aspirations with you.

Find out what’s important to clients

Getting people to talk about money can be a challenge. A 2019 YouGov survey found that half of adults in the UK believe that talking about personal money matters is taboo – higher than sex (42%), religion (26%) or politics (14%).

The study also found that 43% have felt embarrassed talking about personal finances. While a quarter have lied to their family and friends about their personal finances.

One of the key roles of a financial planner is to get clients to open up about their financial situation. As cashflow planning is based on a series of assumptions – a client’s tax position, intended retirement date, existing savings and investment provision etc. – you have to probe these areas in order to give the client accurate and meaningful advice.

So, using cashflow planning helps you to ask questions such as:

  • Do you find budgeting difficult?
  • Would you like to manage your money better?
  • Would you like to save more?
  • Are you worried about your debts?
  • 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?
  • Would you like to take more control over your life?

Once you have the answers to these questions, you can begin to provide the reassurance that clients seek. And, give them the confidence that they are in control of their money.

In our previous blog we talk about how cashflow planning empowers your clients to make informed decisions and help them understand not only the value that you provide as their ‘Life Coach’ but also the impact of the choices they make (or don’t).

With research by The Money and Pensions Service finding that 63% of people said money worries were affecting the mental health of someone close to them. Therefore starting this conversation can be transformative for a client’s emotional wellbeing.

Visualise a client’s future

Financial plans can often talk about seemingly esoteric future events – someone’s retirement, later-life care, death, or legacy. It is hard for a client to grasp some of these far-off concepts. Clients are easily be confused by numbers, tables and pages of data.

To help, cashflow planning gives a client a visual representation of their finances, both now and into the future.

As paraplanner Aishling Costello recently told us:

Explaining a financial plan can be wordy, and clients get bored, but if you’re having a dynamic conversation with them, and pointing out things in a physical way that you can change, it’s brilliant.

Seeing their financial position makes it much easier for clients to understand how their wealth will change over time, the level of income they can afford to take, and the impact of factors such as tax and stock market volatility.

This can prompt much more open conversations about a client’s plans, aspirations, and goals.

Our clients feel more engaged in their financial future. Shortly after being in lockdown, an existing client requested an early retirement forecast. Via a shared screen I was able to model a range of different ‘what if?’ cash flow scenarios and outcomes. They were delighted that we had this functionality. Even more so when the outcomes confirmed that based on the agreed assumptions, retiring early was a real possibility.Martin Rivers, Director, CBK Wales

Clients feel part of the process

As you show a client a visual representation of their financial future, it can help them to feel part of the process. Rather than you dispensing advice and the client choosing whether to accept it, cashflow planning really puts your client in the centre of the financial planning process.

Showing a client how their future will look also empowers them to make informed decisions. While these assumptions will never be 100% correct, it helps them think about what their plan should/could look like. It prompts valuable conversations and discussions.

While cashflow planning can’t predict the future, it can certainly help clients to prepare for it.

Clients get real-time answers to questions.

One of the ways that cashflow planning really does encourage clients to discuss their finances, and enables genuinely life-changing conversations, is by allowing you to answer their questions in real time.

Aishling Costello adds:

Clients are quite intrigued… when they actually can see what the financial plan the adviser has created with them looks like, it really gets them engaged with the overall financial plan…they start asking ‘can I see what it would be like if I retired at 60 rather than 65, 55 instead of 60? How would my position look? Is that feasible?

Clients can really open up about their aims and objectives, knowing that you can show them in black and white what this might look like.

We’ll talk more about the benefits of using cashflow planning live in the final part of our Talk Money series.

Get in touch

To find out more, and how you can enjoy a free 30-day trial, please get in touch. Email sales@i4C.technology or call 020 3308 9448.

This article was written by Rob Tedder, Client Cashflow Solutions Manager at i4C.