As you begin your journey toward achieving your financial goals, it is important to work with a financial advisor who will provide you with ongoing advice and support. It is not enough for your advisor to provide excellent initial advice and recommendations; you must also ensure that their level of service and advice to you continues. Unfortunately, some financial advisory firms charge their clients a fee without providing them with much value.
In this article, we will discuss the significance of cash flow modelling and its role in helping you achieve your financial objectives. Cash flow modelling is extremely valuable software that you can use with your financial advisor to project your financial planning into the future.
Take control of your financial future and avoid costly mistakes by watching this video on the importance of cash flow modelling. If your financial advisor isn’t prioritizing this crucial step, it’s time to find a new IFA—watch now to learn why!
The Importance of Ongoing Advice
When working with a financial advisor, it is important to have a long-term relationship that provides you with ongoing advice and support. Your financial advisor should not just offer you a transactional relationship where they advise you once a year or less. You need to ensure that your advisor is providing you with regular updates and advice on your investments and finances.
What Is Cash Flow Modelling?
Cash flow modelling is a tool that can help you plan your financial future with your financial advisor. At Cameron James, we use Voyant, a service that is considered one of the best in the industry. Voyant offers the most advanced and comprehensive cash flow planning in the UK and the US. With cash flow modelling, you can build, prepare, personalize, envision, connect, and secure your financial plan.
What You Can Do with Cash Flow Modelling
With cash flow modelling, you can do a lot more than just look at your portfolio’s performance. You can drag and drop things, play around with various scenarios, and project your financial planning into the future. For instance, you can adjust your retirement age, and it will show you if you have enough money to retire earlier or later. You can even determine how much money you can spend yearly during your retirement.
Cash flow modelling can also help you plan for inheritance tax. It calculates your liability in today’s money or a future level of funds. The system does an entire inheritance tax plan for you and works out what your liability is going to be.
The Benefits of Cash Flow Modelling
Cash flow modelling is a valuable tool that can help you and your financial advisor understand your financial situation better. By using cash flow modelling, you can:
- Project your financial plan into the future
- Adjust your retirement age and determine if you have enough money to retire earlier or later
- Determine how much money you can spend each year during your retirement
- Plan for inheritance tax
- Build, prepare, personalize, envision, connect, and secure your financial plan.
Voyant Tools Cash Flow Modelling for UK Pension: An Example of DC Pension
Cash flow modelling is a process of predicting future financial outcomes by considering various income and expenditure streams. This process is essential for retirement planning, as it allows individuals to visualize how their finances will be impacted by various decisions. Using Voyant, it is possible to create cash flow models that account for inflation, taxes, and other financial factors.
Benefits of Using Voyant Tools
Voyant is a powerful financial planning software that can create accurate cash flow models for UK pensions. Some benefits of using Voyant for cash flow modelling include the following:
Customizable Scenarios
Voyant allows for the creation of multiple scenarios, making it possible to explore different retirement planning options. For example, users can create scenarios that model different levels of retirement income, different investment strategies, and different life expectancies.
Real-Time Adjustments
Voyant allows for real-time adjustments to cash flow models, making it easy to see how changes in income or expenditure can impact retirement outcomes. This feature can be particularly useful when considering factors like inflation or changes in tax rates.
Detailed Analysis
Voyant provides detailed analysis of cash flow models, including charts and graphs that help to visualize retirement outcomes. This level of detail can be essential for making informed retirement planning decisions.
Example: DC Pension Cash Flow Model
To demonstrate the power of Voyant for cash flow modelling, we will provide an example of a DC pension plan.
Scenario: John’s Retirement
John is 50 years old and has a DC pension plan with a current value of £200,000. He plans to retire in 15 years and wants to ensure that he has enough income to maintain his current lifestyle in retirement.
Cash Flow Model
Using Voyant, we created a cash flow model for John’s retirement. We assumed a retirement age of 65 and a life expectancy of 85. We also assumed that John would make annual contributions of £8,000 to his pension plan and that he would earn an average annual return of 5%.
The cash flow model showed that John’s pension plan would have a value of approximately £755,000 at retirement. We also modelled an annual retirement income of £40,000, which would be funded by a combination of pension plan withdrawals and Social Security payments.
Analysis
The cash flow model provided valuable insight into John’s retirement planning. We were able to explore different scenarios, such as increasing the annual pension contributions or adjusting the retirement age, to see how they would impact John’s retirement outcomes.
Ongoing Advice & Cash Flow Modelling: Key Components of a Successful Financial Plan
Ongoing advice and cash flow modelling are essential components of a successful financial planning process. With ongoing advice, you can ensure that your financial advisor is providing you with regular updates and advice on your investments and finances.
Cash flow modelling is a valuable tool that can help you plan your financial future with your financial advisor. By using cash flow modelling, you can project your financial plan into the future, adjust your retirement age, determine how much money you can spend during your retirement, plan for inheritance tax, and build, prepare, personalize, envision, connect, and secure your financial plan.
Ready to take control of your financial future and reap the benefits of ongoing advice and cash flow modelling? Book a free consultation with one of our experienced IFAs today! Simply click the button on the right side to schedule your appointment and start planning for your financial success.
