Future cashflow planning is probably the biggest innovation in the financial planning industry over the last decade. It's been the game changer for financial planners, as they move from being transactional product sellers to positioning themselves at the heart of a client's personal financial affairs. For many firms, future cashflow planning has been the key factor in driving up trail commission / recurring income levels and as a result, significantly adding to the value of the business.
Future cashflow planning is described in many ways. Here are a few other descriptions that we've heard recently,
- Cashflow modelling
- Financial forecasting
- Lifetime financial planning
At the end of the day, they all amount to the same thing; using Voyant to build your client's financial picture for every year from now until death. Cashflow planning takes account of income, expenditure, assets, liabilities, future planned expenditure and purchases, future windfalls etc. and plots all of this out for a client. It sets out the client's forecasted financial position for each year into the future.
Is cashflow planning just for the wealthy?
Let's nail this one from the start! It definitely is not just for the wealthy! Some advisers see it as only for the wealthy, as they see the following scenario;
It takes a good bit of time to set up a client's record...so
You have to charge a fee for it...and
Only wealthy people pay fees.
At Voyant, we don't agree with any of these statements! If you've put time into learning how to use the system, client records can be set up really quickly; in minutes in fact. They then change the client conversation every year into the future, at no cost to the business. Advisors however usually charge more trail commission due to the added value that future cashflow modelling delivers to the customer experience. If your client proposition is strong enough, the extra trail commission is easily justified.
So if future cashflow planning is not just for wealthy people, who is it for? We've come up with 3 types of clients that really benefit from their financial planner using Voyant.
The future thinkers
Some clients are very focussed on today. However more people now want more clarity and financial certainty about the future, right into their later years. They want to know that they won't ever run out of money. They want their financial picture to consider all of their assets, not just their money - to include property, new cars etc. They want help to make choices - will they be able to afford a holiday home in 10 years time?
Future cashflow planning enables you to build that picture for them.
The "Have I enough" crew
How much is enough? The amount may vary for all of us, but it's a figure we need to know. Many people, even wealthy people have simply no idea if they have enough. So they keep on saving... often at the expense of living a better lifestyle today, one that they actually can afford.
Other people have bits and pieces everywhere and need to see what it all adds up to. Have they enough? You can be the controller of your client's financial life - a very powerful (and valuable) position! Clients will then actually want to see you each year for continued comfort about their future financial security, which leads to more revenue for you over a longer period.
As a result of future cashflow planning, some people need to be told it's time to spend - they have more than enough to achieve all of their future objectives! It's game over here for product sellers as there's no product needs. But your client will pay you as they seek to ensure their financial situation stays healthy each year into the future.
The decision makers
Some people have a big decision to make and want to know what the long term financial implications of each outcome will be. They may want to retire early or step back from their business. They might be planning the sale of their business, now or in 5 years time. They might be looking to minimise their tax liability or carry out detailed estate planning. They might want to really interrogate the amount of life cover they have - is there enough to maintain a lifestyle upon the death of a partner?
Voyant will give you the full picture in making these decisions. And now your client will see that they are receiving professional financial planning, rather than product selling based on a point in time.
Future cashflow planning is not just for wealthy clients. It will open up a world of information to many of your clients, and in the process will build lasting client relationships and drive up the future income of your business.