Liabilities, anticipated income and expenditure: The art of retirement planning


Retirement planning is no longer just a matter of choosing the right pension and waiting a few decades to collect the cash.

These days, there are so many ‘moving parts’ to take into account that advisers need to be armed with technology to offer the best advice, says Dave Upton, Managing Director of Focus Solutions.

With a huge variety of investment vehicles to compare, as well as complex questions of expenditure and tax, cashflow modelling software has basically become an essential tool for retirement planning, Upton says. The best cashflow modelling software can enable savvy advisers to explain and, indeed, show pensions in a way that simply wasn’t possible before.

‘Retirement planning isn’t just pensions, it’s everything,’ says Upton. ‘It’s lifetime ISAs, it’s equity release, it’s how to use various savings and investments to deliver the most tax-effective retirement.’

With so many options in play, cashflow modelling software is now an invaluable tool to let clients ‘see into the future’ and navigate complex changes in dividend tax and pension rules, Upton says.

‘There are fundamentally so many moving parts, and so many financial instruments that can be used, that a decent cashflow modeller is incredibly useful,’ Upton says.

With 2015’s introduction of new pension freedoms, clients have a wider range of choices of what to do with their money, and it’s here that software comes into its own, Upton says.

‘For instance, we can illustrate taking drawdown, taking annuity, partial annuity, and what each of those decisions mean.’

Cashflow modelling software allows an adviser to illustrate nearly any eventuality — from market crashes to deaths in the family, says Upton.

Upton says, ‘We can model if there is one market crash (or indeed several), we can model how to sustain income if a client dies part-way through, and in that case how to transfer monies to the partner. We can also take into consideration what happens if a final salary scheme goes kaput, if a business goes down.

‘We can factor in just about anything.’

For younger clients, the software can offer a level of understanding that was previously impossible, and enable them to consider factors they might otherwise have ignored, Upton says.

Upton says, ‘For younger clients, in the old world, you might have had just one simple goal: invest this much, then you might get this much in retirement.

‘Now it’s more of an end-to-end experience, and cashflow modelling softwarecan enable clients to think about all the things they might do and consider along the way.

‘For instance, you might consider using your pension as a savings and growth vehicle: with cashflow modelling software, working out the benefits is straightforward.’

Being able to show all this information in a single screen, and ‘co-browse’ with clients is an incredibly powerful too.

For retirement specialists, it can mean that they can deliver advice nationally, Upton says.

‘Retirement’s no longer a simple thing. Without the kind of kit that Focus has, it’s actually hard to explain. But we can now do it all in a single screen, with cashflow modelling — and deliver advice via co-browsing so the client can actually see it on screen, as you’re explaining it,’ Upton says.