How to position cashflow modelling with clients

, 14 December 2020

Cashflow modelling offers huge benefits. But how do you position it with clients? Here are some great tips from financial advice firms who use it

Cashflow modelling can help you to engage clients in discussions, build long-term relationships, and demonstrate your value as a financial planner.

But how do you position cashflow modelling with clients?

We’ve asked some firms using cashflow modelling to give us an insight into how they introduce the concept to clients. Read on for some great ‘best practice’ ideas.

Firstly, be clear what you’re using cashflow modelling for

When we chat to firms about using cashflow modelling tools, we often encourage them to think carefully about what they are using cashflow modelling for.

  • Is it to engage clients in the financial planning process?
  • Is it to drive administrative efficiencies?
  • Is it to create a more compliant report?
  • Or is it for all these reasons?

Unless you know specifically why you are using cashflow modelling, you won’t be able to deliver a clear message to clients.

Introducing cashflow modelling to clients

There is a wide range of ways that you can introduce the concept of cashflow modelling to clients:

  • At a first meeting, perhaps even with a demonstration of how the software works
  • In your company brochure
  • On your website when you are discussing the benefits of lifetime financial planning.

A mistake that many firms make is to focus on the technology and the outputs (graphs, charts, etc.) rather than how cashflow supports long-term planning.

Cashflow is designed to engage clients, to get them involved in financial planning decisions, and to encourage them to focus on the bigger picture. When introducing cashflow that should be your approach – cashflow as a means, not an end in itself.

Martin Rivers, at CBK Wales, says:

“Our clients feel more engaged in their financial future. It clearly demonstrates the impact of our recommendations.

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.”

Three examples of how a firm introduces cashflow to clients

In a recent webinar for Professional Paraplanner, we spoke to Aishling Costello, paraplanner at Fidelius. One of the questions we asked Aishling was: “how does your firm position cashflow modelling with clients?”

Aishling says:

“As a paraplanner, I wouldn’t necessarily be involved in the first meeting where cashflow was introduced. So, I had a chat with one of the advisers to see how she actually introduces it.

“She’ll have her normal meeting, go through the fact-find, talk through the client’s goals, aspirations and any objectives that they have.

“They will basically explain to the client that we have this really interesting tool that can actually present your whole lifetime of income and expenditure – and predicted retirement expenditure – into one concise graph where you can actually see what this is going to look like.”

Aishling also reinforced the point we made above that some of the real benefits of cashflow modelling come when it is used ‘live’ with clients. She adds:

“It’s dynamic and good for helping get the clients to see what you are trying to say.

“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.”

Paul Moat from Sandringham also told us how he introduces cashflow modelling to clients.

“I suppose every client is different, but I always position this as a ‘what if?’ plan. ‘What if’ I do the same or ‘what if’ the market suddenly drops?

“This gives clients and me comfort that the plan is the right course of action or we need to change something. Pre-cashflow it was very much guesswork but now I can show the client with a graph what their financial future could look like.”

Finally, Headley Financial Services told us:

“It is a step back from just wanting to grow money – it is asking what will it allow you to do – what are your goals in your life that you wish to achieve? That’s the ‘why’.

“Once you know that, cashflow modelling allows you to see how you can achieve it and how robust your plan is to external shocks. It can, and should, be updated each year as life changes and rebasing it allows you to check you are still on track or whether some adjustment is needed.”

Clients who have been through the cashflow process “have peace of mind and can give themselves permission without guilt to spend money now (and how much) without worrying about running out down the line.

“Why is it useful? It turns flat numbers into pictures and at the press of a button we can see how that picture might change should your needs or ideas change.”

Differentiating yourself from other firms

In the past, using cashflow modelling has helped many firms to differentiate themselves from their competitors. It has been a useful USP when chatting to prospects and existing clients.

Using the tool live in a meeting is a strong way of positioning it with clients. They can see the forecasts in real time and will often ask you to model scenarios for them. “Can you see what would happen if I retired two years earlier?” We’ve recently shared seven reasons why cashflow should be used in a live client environment.

Showing how cashflow works in a client meeting helps a client buy into the process. It gets them engaged with the idea of long-term financial planning and seeing the tools in action means they get a better understanding of the life-changing impact it can have.

Sam Connor at Rosart says:

“With all meetings being held virtually, our clients have been very impressed with the ease in which we can navigate them through their financial plans, making live adjustments and providing outcomes in real time which they can absorb with minimal explanation. The quality of the visuals is amazing and helps bring everything to life.”

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 Carly Robbins, Client Cashflow Solutions Consultant at i4C.