Prophesising your financial future
To pre-experience your financial future can be incredibly powerful. To have the visibility to know what’s required to achieve your financial goals and objectives, can provide the clarity needed to help make some important decisions. Patrick Bowen, Wealth Manager, discusses the purpose of MASECO's cash flow planning process.
To pre-experience your financial future can be incredibly powerful. To have the visibility to know what’s required to achieve your financial goals and objectives, can provide the clarity needed to help make some important decisions.
As your financial planning is an evolving process, it is important to consider the impact of future changes to your circumstances and how these can impact on your financial and lifestyle objectives.
The purpose of our cash flow planning process is to provide an interactive way of projecting your financial future at different life stages, to give you more clarity and peace of mind. Whilst the cash flow forecast serves only as an indication of the future, it can be very useful in providing answers to questions to help you achieve financial empowerment. Examples of these include:
- Whether to buy that new car you’ve had your eye on?
- Whether to commit to those renovations you’ve been thinking about?
- How much do I need to save to meet my future retirement spending goals and how much investment risk do I need to take?
- What would be the impact on my long-term financial position if I retired early?
- Can I afford to spend more in the earlier years of my retirement and how would this impact my family in later life?
- Can I afford to gift money to my family to help secure their future, and what effect will that have on my estate from an inheritance tax perspective?
Having a robust cash flow plan in place, that is flexible enough to adjust as time progresses, can give power to your decision making, and the advice being provided.
At MASECO, we use a specialist cashflow planning tool, to take all that we know about your current financial situation and project forward your financial position.
Instead of setting this in place once, and then hoping for the best, we look to continually update our plans with clients to make sure we are still on the straight and narrow and that any goals and objectives are still achievable. If your arrangement needs to be adapted, we can adjust our advice as required.
For many of our clients, building a robust financial plan is particularly difficult as they navigate multiple tax jurisdictions. Understanding the rules and treatment of accounts in different jurisdictions adds yet another layer of complexity to the cash flow planning conundrum. Given MASECO’s specific area of expertise, it is at the forefront of our minds and key to our considerations when building these models.
Through regular updates to your cash flow plan, we can ensure our advice adapts to your changing needs and your financial arrangements remain appropriate on an ongoing basis. For most clients, we typically review cash flow plans on an annual basis in line with regular client review meetings. However, cash flow plans can also be requested on an ad-hoc basis.
I’m a strong believer that cashflow modelling is an incredibly useful tool. However, it should not be 100% relied upon as there are always going to be significant assumptions built in. For example, inflation rates, tax rates, growth assumptions etc. Any of these can change significantly. Therefore, we would not expect the resultant figures in the years to come to be exactly in line with the plan but, they should give an indication of the direction of travel. The advice we plan to implement can be determined as suitable or not based on the direction of travel within the plan. The key, in my opinion, is to make sure the assumptions input are reasonable and achievable, to hold ourselves to account and be authentic to ourselves (an often overlooked MASECO value).
If you would like to explore this in more depth or you would like to make some changes to your existing cash flow plans, please feel free to reach out to your dedicated wealth manager.
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