Cash Flow Planning Software: Delivering Better Outcomes for Clients

In this blog, we explore the benefits of cash flow planning software and how modern tools are empowering advisers to deliver better outcomes and help their clients reach their financial life goals.

Enabling your clients to meet their financial life goals is a key priority for advisers, and accurate cash flow forecasting and planning are vital steps to achieving this. While you can build an effective enough cash flow modelling tool using Excel spreadsheets, modern cash flow planning software offers advisers more comprehensive capabilities that account for more factors than was previously possible.

Why financial advisers need to optimise their cash flow planning processes

Cash flow details help advisers identify what investment paths clients should take to fulfil their financial life plans. While tracking and analysing income and expenses is key in cash flow planning, more complex factors must be considered. The best cash flow planning software takes into account clients’ sources of income, assets, life events, debts, expenses, tax obligations and joint-life financial plans, if applicable.

Beyond discussing goals and suitably identifying risk, using cash flow planning solutions is the only way to effectively check clients’ capacity for loss, particularly for retirement. We strongly suggest advisers leverage these cash flow solutions to enhance advice suitability and optimise their planning processes. 

Benefits of cash flow planning software for advisers

So, what other advantages can the technology offer advisers? Here are some of the main benefits of adding cash flow planning software to your adviser tech stack:

  1. Easily demonstrating to clients how their life plans can be supported by their finances
  2. Calculating capacity for loss while accounting for changes in market conditions so that living expenses can still be met
  3. Enabling suitable conversations about plans that work
  4. Connecting investment suitability to achieving goals, within the right levels of risk
  5. Better articulation of likely future outcomes for clients; finances 
  6. More thorough data gathering and inputting

Key considerations when exploring cash flow planning software

When selecting cash flow planning software, there are a few things worth checking to ensure that all your financial planning bases are covered. Typical questions you should ask potential third-party providers include:

  • What is the scope and limitations of the tool? 
  • Does the software use deterministic or stochastic forecasting? If stochastic, what is the basis of the modelling?
  • Which assumptions are built into the software and which can be amended?
  • Is the tool updated promptly when legislative changes occur?
  • Is imputed data secure, and does the tool meet data protection requirements?
  • How easily can inputs and outputs be saved to individual client records?
  • Can clients input information into the models themselves?
  • Can the software be accessed and used remotely?

Best practices for maximising the use of cash flow software

In addition to checking these considerations, there are a few good practices to implement within your process when using cash flow planning software.

Data inputting - Ensuring that data is input correctly before any reports are generated for clients is important, as errors can impact outcomes and recommendations significantly. So, make sure cross-checking mechanisms are in place. 

Record-keeping - Efficient record keeping is also necessary for effective financial planning and compliance and should include details of due diligence conducted on the tools considered records of all tools used, and the assumptions and stress test your firm uses. 

Training It is also important to remain adequately trained on your chosen tool’s capabilities and undertake refresher training as needed, especially when updates are released on the tool. 

How EV’s adviser tools can solve your cash flow planning issues

EV’s lifetime cash flow planning software solution, EVPro Goal, offers a simple, user-friendly front-end complimented by powerful sets of calculations in the back-end. Cash flow functionality is combined into an all-in-one solution with risk suitability factored in for clients and their investments. 

Built with stochastic first for probability outcomes and likelihood, the tool allows for constructive conversations with clients, and faster, more efficient calculations mean less time required on cash flow planning and in the tool

Advantages of using EV’s cash flow planning software

What makes EV’s cash flow planning software different? Here are some key advantages you’ll get with EV:

  • Metrics provided to compare plans over time
  • Backsolving capabilities which give answers to identified problems
  • Extensive stress testing to cover market risks, unpredictability and potential events
  • Connects directly with the risk suitability of clients’ portfolios, so portfolios can be updated and the impact on plans can be seen instantly 
  • Additional graphs showing a range of outcomes and financial plan journeys based on specific scenarios allow for easy explanations to clients
  • Options for clients’ plans can be created with multiple what-if scenarios saved
  • The impact of revisions can be easily compared and explained to clients
  • More accurate forecasts with improved calculations like:
    • Inclusion of lifetime allowance tax
    • Additional tax-free cash on final salary pension schemes
    • Tax-free cash applied independently to each pension product 

Understand your clients’ capacity for loss instantly using unique metrics for income objectives, showing if there is capacity or not, and the adequacy of assets to cover any gaps to reach financial goals.

Our cash flow planning tools including in EVPro, our new end-to-end financial planning software for advisers. Learn more about EV’s transformative adviser solutions.

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Summary

Accurate and efficient cash flow planning is vital for ensuring your clients can reach their financial life goals and maintain their lifestyles - pre and post-retirement. Drawing on the capabilities of cash flow planning software can help optimise your process and deliver better client outcomes. With EV’s solutions, you can create and communicate suitable cash flow plans easily and quickly, reassuring your clients of their plans and the likelihood of them meeting their goals. 

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