By Natalie Kempster, Chief Client Officer at Purposeful Group
Most people approach retirement with the same question quietly sitting in the back of their mind: will I have enough? It’s a question that often gets answered with a shrug, a rough mental sum, or a hopeful “I think I’ll be fine.” That’s not good enough, and it’s not what our clients deserve.
This is why cashflow planning sits at the heart of our Elevate service, and why every Elevate client has a financial plan built around it.
Elevate is the name for our core financial planning service across the Purposeful Group which means we have a consistent approach and can share best practice with tools like cashflow modelling which brings me to the next question; what is cashflow modelling?
Cashflow planning is the tool that turns retirement from a hope into a plan. We sit down with you, take everything that matters financially (your pensions, savings, investments, property, the income you’d like to draw, the lifestyle you want to live) and we map it out year by year, right through to age 100. Then we play with it. What happens if you retire two years earlier? What if you pay the mortgage off before you stop working? What if you want to gift to the children or grandchildren, or help with a deposit? What if care costs become a reality at some point? Each of these conversations stops being abstract and becomes something you can see.
The most powerful moment in this process tends to be the same one for nearly every client. It’s the point where they look at the chart and realise that the version of retirement, they had been worrying about and the version that the numbers actually support are two different things. Sometimes that’s reassurance, the quiet confirmation that yes, you can afford to stop working when you wanted to. Sometimes it’s the opposite, and we need to make some changes. Either way, you know. You’re not guessing anymore.
The other thing cashflow planning does, which I think is the real value of it, is stress test the plan. Life doesn’t move in straight lines. Markets fall. Inflation runs hot. People live longer than they expected to. We model those scenarios deliberately, so that when something does happen in the real economy, you already know how your plan responds and what your options are. You’ve seen it before. You’re not making decisions in a panic.
It’s worth being honest about what cashflow planning is and isn’t. It’s not a forecast and it’s not a guarantee. It’s a planning tool, and its quality depends on the quality of the conversation behind it, the accuracy of the information that goes in, and the judgement of the adviser interpreting it. Used well, the FCA recognises it as a key element of retirement advice. Used badly, it’s a colourful chart that gives false comfort. The difference is the adviser, and that’s where our value sits.
For our Elevate clients, this isn’t an optional add-on or something we do for some and not others. It’s built into the service, reviewed regularly, and updated as your circumstances change. Your plan in five years’ time will look different to your plan today, because your life will, and that’s the point.
If you’re an Elevate client and you’d like to revisit your cashflow plan, or talk through a “what if” you’ve been thinking about, that conversation is always available to you. Just ask your Financial Planner.
Important information
Cashflow modelling is a financial planning tool designed to illustrate how your finances may evolve over time. It is based on a number of assumptions, including investment returns, inflation rates and life expectancy, which may not reflect future outcomes. The results shown are not guaranteed and should not be relied upon as a forecast or prediction of future performance. Actual outcomes may differ significantly due to changes in economic conditions, legislation, personal circumstances or investment performance. The value of investments and the income they produce can fall as well as rise, and you may get back less than you invest. Cashflow modelling is used to support financial advice but does not replace the need for personalised, regulated advice based on your individual circumstances.