July 31, 2019
Cashflow modelling has become a cornerstone of financial planning for many advisers in recent years. It provides clients with a clear strategy and recommendations to achieve that their ‘happily ever after’ without running out of cash. In last year’s Focus Solutions cashflow survey, 67 per cent of those surveyed stated that cashflow modelling has become ‘essential’ to the advice process. An adviser’s business and client base can differ significantly, therefore the key to effective cashflow modelling is to find what works best for any particular business.
Ethos Financial Planners is an example of an advisory business that is reaping the benefits of latest cashflow modelling tools. John Morten, the managing director, whose firm uses Focus’ now:plan cashflow modelling tool says:
It’s really been an upgrade on our business and in such a short period of time too. The impact it’s had has been significant, not just for new clients, but very much for existing clients as well. We’re able to offer the client a lot more for their money at a time when the cost of fees is very much in the spotlight — it just demonstrates we’re providing real value. So, what are the key elements to look for? Speed, simplicity and good quality visuals are key according to John.
It’s important to have a system that doesn’t burn up an adviser’s time learning how to use it – time is money. Likewise, most advisers who use a cashflow modeller tend to agree that it’s a great tool to use with clients to illustrate to them their financial goals and what that means for their current and future finances. So it needs to be engaging and easy to understand.
Ultimately what this means is that the adviser’s business becomes more efficient and therefore more profitable. Tech solutions that are easy to pick up and use with and without clients present should be there to allow an adviser to service their clients better with minimal cost of time. Whether it’s a large IFA or a small business with owners looking to exit, the investment is minimal when using the right software in comparison to the injection in efficiency that the right cashflow modelling can offer.
The other area where cashflow modelling can help is with engaging the next generation, explains John. Intergenerational wealth transfer is a worry for many advisers as their clients age. A good piece of clever yet simple kit that helps the children of our clients to understand their financial future is invaluable in gaining their attention and ultimately their trust. They often attend with their parents to talk about cashflow and inheritance and the tech helps us to engage them better.
Advisers who don’t use a cashflow modeller yet should speak to Focus Solutions for a demonstration. It’s quick and easy and will make enable a more efficient approach to how you can engage with clients. If your firm currently has access to a cashflow modeller but the take-up of it isn’t great, it may be because it lacks the intuitive ease of use that it needs in order for advisers to feel comfortable using it with clients. Speak to Focus and we’ll show you how simple and effective our cashflow modeller is to use.