Cash Flow Modelling – Helping to map your financial journey
I am excited to let you know about a major new development within CL4Women over recent months, and that is the introduction of Cash Flow Modelling to our client advice process.
In short, Cash Flow Modelling allows us to use the data which our clients have provided us – such as their assets, liabilities, income, expenditure etc. – and provides a forecast of how their wealth may grow or decline in future years. The graph below is a good example of this:
In this example, the green bars show how the client’s income is projected to change year-on-year; the yellow line shows how their expenditure will change each year and the pale-yellow bar shows how the value of their assets will change up to age 100.
By presenting our analysis in this format we will hopefully be meeting our aim of providing information in a clear and digestible format.
It is worth mentioning that all of our cash flow analyses are bespoke. For example, what if our client lost their job or became ill and spent a period unemployed? What if we experienced a crash in financial markets and their investments fell in value? Our cash flow tool allows us to run these ‘what if’ scenarios.
Whilst the forecasts will never be an exact science, we see this tool as being of major benefit to a number of our clients; particularly those who are going through a pension sharing order as part of a divorce or those who need general retirement planning.
Our cash flow analysis can help to determine sustainability of a client’s income during retirement and provide an extra layer of security; helping to ensure they don’t run out of money before they run out of breath!