The power of cashflow modelling

, 14 July 2020

Cashflow modelling empowers your clients to make informed decisions. Use it to 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).

A pandemic. A cryptocurrency crash. A financial crisis. A dot-com bubble. Just a few of the headlines from the past twenty years that have drawn the attention of clients away from what is important. Their long-term financial plans. Instead, their focus moves to the short-term aspect of investment management.

It’s fair to say that Financial Planners are increasingly viewed as ‘Life Coaches’. They have a direct impact on the lifestyle of a client over the long-term and no longer focus solely on gains or losses. This ‘Planner as a Life Coach’ movement has gathered further momentum during the recent volatility and economic uncertainty caused by Coronavirus.

Our users tell us client reactions have been mixed. Some understand the long-term nature of investing and have chosen instead to focus on family and friends at this difficult time. Others have focussed on the opportunities that arise because of the current climate.

Since lock-down, we’ve seen an increase in demand for cashflow modelling software. Firms want technology that can help them answer the questions they are being asked but isn’t labour intensive. With modern technology, information is at our fingertips, and clients expect the same from their professional advisers. They want instant answers when it comes to questions about their life goals.

  • Can I still retire as planned?
  • Do I need to reduce spending?
  • How has this impacted the planned sale of my business?

With cashow modelling, demonstrating the impact of (or lack of) market movement on clients’ long-term plans is easy.

There are always regulatory obligations to contend with. MIFID II has caused numerous administrative headaches but let’s not forget its benet to a client. Principally full transparency of the service they are receiving, the true performance of assets and the charges for financial planning services.

Not such a problem when markets are rising. But what happens when valuations are down yet financial planning fees have still been deducted? Back to conversations about long-term financial planning.

The visuals produced by a cashflow tool show a client where you are adding value. It is there in black and white (or yellow, green and blue). The value you are providing is demonstrated throughout the cashflow and reaffirms the planning that you’ve put in place. For the long-term.

Cashflow GraphCashflow modelling isn’t a one size fits all service. At i4C we firmly believe that the client should be central to the cashflow modelling exercise and that it should be incorporated into your meetings. Let your clients own the decisions they make and see the impact of a well thought out and stress tested financial plan. Crafted by you, the Financial Planner.

Technology should enhance your client relationship and help you alleviate their concerns and fears. 

enhance your client relationship Technology should help, not hinder, your processes. More so now than ever. Use technology to empower your clients to make informed decisions. Use it to 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).

Crucially, choose technology that makes you more efficient. Technology that saves you time and does all the heavy lifting for you. Leaving you to focus on what’s important, client relationships. Whether that’s existing relationships, or nurturing new, embrace the technology that will help you achieve your own goals as well as those of your clients.

‘Cashflow’ as a word simplifies the process too much.

It is more than just sustainability, much more than money in vs money out. It is a financial planning process that invites your client to engage with you in a completely different way. Those that have mastered the art of cashflow planning are still a minority, but they are reaping the rewards. So, it is only a matter of time before lifetime financial planning is at the heart of every client discussion.

Used by leading financial firms to drive profitable relationships and increase client engagement, i4C was designed by financial planners. It’s incredibly easy to use and understand, ensuring maximum impact for your clients. i4C is powered by comprehensive calculators, providing clarity over all aspects of lifetime planning, including tax. You can access a free trial of i4C by clicking here.

This article was written by Rob Tedder, Client Cashflow Solutions Manager. It was first published in Trusted Adviser Magazine on page 30.