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Sue Whitbread: The case for honing your skills in cashflow modelling


While there is little doubt that most advisers have excellent technical knowledge, it is not so easy to argue that planning skills are up to the same standard.

At the Institute of Financial Planning we have noticed an increase in enquiries from members and non-members who want to find out how they can develop their skills to integrate cashflow modelling into their client proposition.

Following the RDR last year, many advisers completely changed their business models so they could show the value they add right at the start of the client engagement process. Cashflow forecasting is a powerful tool for doing just that and has attracted many new supporters as a result.

Looking to the future, the dramatic changes to retirement options announced in the Budget in March also make a strong case for advisers honing their cashflow forecasting skills.

Consumers will need help to make important decisions when it comes to taking income from their defined contribution schemes if they are not to risk running out of money during retirement. Advisers need to make effective use of cashflow forecasting, which sits at the heart of the six-step financial planning process.

Whether advisers use proprietary software such as Truth or Excel spreadsheets is a decision individual firms will make for themselves. But to get the most out of technology advisers still need to understand the workings of cashflow modelling. It is not just doing it but doing it well that is the real differentiator.

The IFP runs workshops to help advisers gain the necessary skills.

Sue Whitbread is director of communications at the IFP



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