The document discusses the importance of cash flow planning and financial planning. It emphasizes establishing clear goals and objectives, gathering comprehensive client data, developing a logical plan through analysis and presenting options to clients. Key aspects of the planning process include defining a client's lifestyle needs, assessing assets and budget, addressing risk through multiple scenarios, and using tools like calculators and cash flow modeling.

1. Cash flow planning
Richard Allum CFP APP

2. “Creating ways to help people
make more sense of money”

3. Why am I here today ?

4. “Those that can’t see the
future……”

5. “Those that can’t see they can’t
see the future.”
Alan
Dick

6. Lifetime planning
Estate planning
Too much money

7. Investment risk
Shortfalls
Getting real

8. Show me the money!

9. “A poor financial planner is a poor
financial planner.”
David
Norton

10. Planning process
1. Establish goals & objectives
2. Gather data
3. Analyse information
4. Develop plan
5. Implement plan
6. Monitor & adjust

11. Plan structure
• Cohesive document
• Logical progression
• Language
• Style & content
• Action plan
• Presentation options

12. Key roles
Adviser Paraplanner
Leads relationship Gathers data
Presents plan Analysis
Provides advice Prepares plan

13. Data, objectives & assumptions

14. “One of the keys to successful
financial planning is learning to
let go of precision.”
Carl Richards @behaviorgap

15. No objectives, no plan!
• Clear & concise
• Prioritised
• Realistic timescales
• Agreed & written down
• Regular reviews
• Needs v wants!

16. Financial objectives
• Increase my spendable income
• Pay less tax
• Improve retirement income
• Increase investment returns
• Pay off mortgage

17. Emotional objectives
• Increase my financial security
• Achieve financial independence
• Safeguard my family
• Understand more about my money
• Help other people

18. Primary objective
As a minimum maintain the lifestyle
I want under any circumstances
however long I live

19. Useful questions
• So what?
• Why?
• What would need to happen for….
• Can you afford to do the things you want?
• Do you have enough time to do them?

20. Lifestyle planning
• Define it
• Cost it
• Fund it
• Transfer surplus
• Risk management
• Tax efficient

21. Assumptions
• Inflation
• Earnings growth
• Investment returns
• Tax
• Mortality
• Capital conversion

22. Real value of money
Assumption Notional Real
NAE 4.5% 1.5%
Savings 2.0% -1.0%
Investments 6.0% 3.0%
School fees 6.8% 3.8%

23. Assumptions
In principle, simply as a planning
assumption…
If you can’t fault the assumptions, it’s
reasonable to accept the conclusions…

24. Net worth
Asset Value
Property £500,000
Realisable assets £210,000
Business £250,000
Personal effects £50,000
Pension funds £230,000
Total £1,240,000

25. Liquidity ratio
Cash & investments
21% £210,000

26. Budget
Source Amount
Net income £4,500
Expenditure £3,000
Disposable income £1,500
Spendable income ????

27. Cash flow planning

28. Framing
Context
Engagement

29. Show client….
• If on target
• What return is needed?
• How much more….is needed?
• When (or if) they can stop work
• How much they can give away

30. Making sure you don’t run out of
money!

31. Multiple scenarios
• If all goes to plan
• Someone dies
• Serious illness
• Retire early
• Sell business
• Investment risk & loss….

32. What the FSA said

33. The “problem”
Inadequate account of….
capacity for loss

34. Over reliance on tools
• Lack of understanding
• Standard deviation & volatility
• Poor question & answer options
• Monitoring & management information

35. Behaviour
&
emo3ons

36. A solution
• Robust, repeatable process
• In-depth discussion
• Full understanding of risks
• Don’t rely on risk profile tools
• What return is needed?
• Is any risk needed?

37. Cash flow tools

38. Calculators

39. Excel

40. Goal seek

41. Solutions

44. Voyant

45. Truth

46. Benefits
• Better client relationships
• In control
• Greater fee income
• Generational planning
• No market moans!

48. Good reads

49. www.moneyscopehq.com
www.paraplanplus.co.uk