From Adviser Guide:
Q: How do I create the best results for clients?
Even the flashiest software won’t help you if you don’t ask the right questions.
Done correctly, cash flow modelling will give a very clear early signals on whether a client will be embarrassed in 10-15 years’ time either by having far too little or far too much cash and investments, points out Sandy Robertson, managing director of Acumen Financial Planning.
So what is the key to producing the perfect results for a client? The best software, asking the right questions, a simple report at the end, or talking the client through the whole process in front of a screen?
“On its own, good software won’t create a good cash flow and financial plan,” states Richard Allum, managing director of Paraplan Plus. “To produce a good cash flow forecast an adviser needs to ask their clients the right questions first. Software won’t help them to do this.”
The line of questioning an adviser uses falls into two parts, according to Michael Hunt, partner at Greycoat Financial Services: “Where a client is now and where they would like to be. So initially, most of the information necessary to produce a model can be captured from the normal fact finding and data gathering.
“The second part is discussing goals, objectives, ambitions and the respective dates and costs which can then be factored it the cash flow model to look the possible effects.”
Mr Allum argues that the choice of software is still important. Examples of some of the main software used by advisers includes: Adviser Lifestyle, Certior, Dynamic Planner, MoneyScope, PlanLab, PlanPlus, Plan4Life, Prestwood Professional/Truth, and Voyant – almost all of which have a free online demonstration version for advisers to see what best suits their process.
“There are stand-alone cash flow forecasting software tools and there are those that are part of bigger systems,” he says. “The right tool depends on what an adviser considers best for their advice process and their clients’ requirements. Regardless of which tool advisers select for building their cash flow models, they should ensure that they understand the assumptions behind their selected software.
“Some advisers build cash flow models using a spreadsheet that they’ve developed. Of course, the reliability and sophistication of this method relies heavily on their skills with applications like Excel, and the assumptions and process they build into their spreadsheet.”
Either way, maintains Mr Robertson, the results are roughly the same. “Well written software and well written spreadsheets ought to produce the same results but if an advisor is unfamiliar with accounting and taxation conventions – don’t try creating a spreadsheet,” he warns.