Friday, 21 October 2016 11:07

Julie Lord: Some advisers long way off understanding cashflow

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Julie Lord CFPTM, former IFP President Julie Lord CFPTM, former IFP President

It seems that my last column about Lifetime Cashflow Planning has provoked some interesting debate.

Judging by some of the comments I have received personally there are still some advisers out there who are a long way from understanding why this is such an important tool for them and their clients.

The recent poll on the FPT website showed about 4 out of 5 believe cashflow modelling to be essential to true Financial Planning (which is unsurprising given the reader audience I guess) but it got me to thinking about why 22% of the adviser population who responded, do not believe this to be the case.

I think the main reason (based on the feedback from Prestwood Software) is that advisers do not take enough time to stop their day to day work and get to grips with new systems which they (mistakenly in my view) regard as too complex or time consuming. This is especially the case in one person businesses, where the adviser is afraid that any downtime learning ‘new stuff’ is going to affect their income.

It might be useful to know that cashflow systems can easily be configured to individual businesses and templates designed to suit, so that a straightforward cashflow model can be produced for a client in less than 2 hours. This is time well spent as it then engenders better client engagement (with their life rather than just their money) AND (as the 4 out of 5 will attest) it is more definitely profitable in the long run.

It is perfectly understandable that those advisers who ‘manage money’ may need greater persuasion to adopt cashflow modelling as their income is based on a simple percentage of funds under management. However, with these costs being challenged daily in the popular press, they may need to start thinking about other income streams and/or doing more for their 1%.

I know the CISI believes that the adoption of comprehensive Financial Planning and cashflow modelling by its members who are ‘wealth managers’ is an important step forward in developing a proper profession. Additionally, the PFS regional conferences this summer have focused heavily on this subject resulting in significantly increased enquiries to specialist cashflow software companies.

So if you (or someone you know) is still unconvinced, I will relate the old Chinese proverb that states: “You will chop down the tree quicker, if you stop to sharpen the axe!”

Julie is a Chartered Wealth Manager, Chartered and Certified Financial Planner, co-founder of Magenta Financial Planning, director at Prestwood and ex-IFP President.

Read 2064 times Last modified on Friday, 19 May 2017 08:53
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