Cashflow modelling is widely accepted as an essential part of the retirement planning process. But the right technology, used to its full potential, is far more than a simple retirement income tool. As an integrated part of the financial planning process, it can be used in every client situation to help strengthen client relationships, minimise the compliance burden and maximise profitability.
According to intelliflo’s research in December last year, 70% of advice professionals identified cashflow software as the most important tool to help clients meet their long-term goals. Yet despite this general appreciation of the power of cashflow modelling, only a third (34%) of firms offer it to all clients.
Many advisers see the value of using cashflow tools when clients experience a significant milestone like receiving a lump sum (26%), a lifestyle change (40%) or retirement (44%). But just restricting its use to these life events limits the value that cashflow modelling can add to the financial planning process and the success of the firm as a whole. By embedding it into your process for every client, you invite them to engage with you in a completely different way – as their lifetime financial planner rather than a transactional adviser. Regardless of whether their needs are simple or complex, cashflow modelling allows you to easily incorporate all goals and scenarios into one user-friendly financial roadmap, creating visually engaging outputs that prompt more detailed conversations about future ambitions.
Cashflow modelling isn’t a one size fits all service. Every client is different and their individual decisions and objectives will have a unique impact on their finances throughout their lives. The real value of cashflow planning software is in being used live and interactively, making the client central to the process so they can see how different choices impact the plan. You can use it to discuss their aspirations – supporting children through education, working part-time, exotic holidays, fast cars, moving house – and make live adjustments to explore scenarios and help them consider their options by visually illustrating how each choice is likely to affect the client’s cashflow throughout their life.
The right cashflow modelling technology can engage clients with their finances and help them focus on the long-term view, rather than worrying about short-term volatility. More than nine out of ten (92%) advisers agree that it helps clients understand the effects of significant market movements on their plans and two thirds (66%) say cashflow modelling has reduced client worry during the pandemic.
Yet despite the clear value it can add, our research found that a quarter of advisers don’t use their cashflow tool live with clients. From our conversations with advice professionals, some are worried about the logistics of amending the plan in front of clients, while others are concerned about the complexity of the output. But the right technology should be simple and intuitive, helping, rather than hindering, your processes and clearly demonstrating the value of your advice by reaffirming the plan you’ve put in place and building the client’s trust in your expertise.
Alongside the client benefits, there are clear advantages to firms too. It offers advisers the ability to build, stress-test and adapt plans with minimal effort and maximum impact. The technology does the heavy lifting, with powerful calculators to solve tax, pension and investment complexities, handle inter-generational wealth transfer, model assets and liabilities and support the wider financial strategy. It also eases the compliance burden, allowing you to efficiently track changes and create an audit trail of the client discussion and reasons for the decisions taken. And by saving adviser time and delivering the plan more efficiently, it can maximise the firm’s profitability, enabling advisers to service more clients and opening doors to new conversations about wider financial planning.
A good cashflow solution can engage clients with their plan, clearly demonstrating complex scenarios and encouraging them to look at the bigger picture. It can also improve adviser efficiency by taking on some of the hard work, leaving you time to focus on developing the plan and strengthening the client relationship.
Nick Eatock is CEO of intelliflo