Lifetime Cash Flow Modelling is a concept borrowed from business. Essentially it involves looking at the assets and income of the company over a period and balancing these against current and future liabilities, alongside a forecast of future income & expenditure linked to the business’s objectives.
Similar principles can be applied within personal financial planning and are incredibly relevant to the individual client. Initially your adviser will identify personal financial goals and objectives, and then model your financial objectives alongside current and future assets, to identify if your objectives are realistic and most importantly, are they sustainable?
Lifetime Cash Flow Modelling is an invaluable exercise for those for clients who are either planning for, or who are entering retirement. We often get asked by clients, ‘can we afford to retire now and have an income of £X through to age 70 whilst our health is likely to be good, and then £Y for the rest of our expected lives without running out of funds / income?’ It is exactly these type of questions that Cash Flow Modelling can help to answer.
It also holds added value in the sense that additional variables can be added and modelled into the process. These variables may include possible inheritances, the start of state pensions, gifts of capital to children etc, but also negative impacts such as emergency medical costs, or stock market volatility / declines.
The outcome of Lifetime Cash Flow Modelling is a full picture of possible outcomes based on the projections and assumptions used, and whilst the modelled outcomes are not guaranteed, it does help to further facilitate and underpin informed financial decision making.
Our advisers are strong advocates of Cash Flow Modelling and they will spend the time to work with you to create a plan that focuses on delivering a lifestyle outcome for you and your family that is not only meaningful and relevant, but also fully capitalises on the assets you have available; and reduces the risk and worry that you ever run out of money.
For some of our clients it has even revealed a greater than expected future wealth projection that has resulted in both comfort and an enhanced disposable income availability. Working together is of paramount importance to our advisers.
In addition to those focusing on Retirement Planning, our advisers encourage all clients to engage with Cash Flow Modelling as part of their annual financial planning review.
Lifetime Cash Flow Modelling is not regulated by the Financial Conduct Authority.
If you’d like to find out more about how Cash Flow Modelling can help you plan for the future, our advisers would be happy to help.