Lifetime cash flow planning – the key to a sustainable financial future

Cash flow forecasting is a pivotal stage in Everlong’s financial planning process. It provides us with a clear picture of a prospective client’s current financial position in relation to their future monetary goals. Our financial planners explain how we can use our lifetime cash flow modelling tool to create, manage and protect your wealth effectively.

What is cash flow forecasting?

Cash flow forecasting is a key tool in financial planning that is used to evaluate your financial future. Based on your current incomings, outgoings and savings, it can tell you whether your current lifestyle is sustainable long-term and provide you with estimated values for future cash flow and wealth.

How can cash flow forecasting benefit you?

Our advisors use cash flow forecasting to help you create smart plans that are designed to reach your long-term financial goals. The comprehensive forecasting process has a variety of different objectives, which include:

  • Evaluating whether your current financial situation and spending habits are sustainable to achieve your desired retirement lifestyle.
  • Demonstrating how small changes to current spending could accumulate over time to have major impacts on your goals.
  • Exploring a variety of ‘what if’ scenarios to forecast how big financial decisions could impact your long-term finances and support your decision making.
  • Highlighting opportunities to utilise any tax allowances you may be eligible for and increase your tax efficiency through strategies such as Inheritance Tax (IHT) planning.
  • Helping you to plan your finances so you are financially secure, now and in the future, in addition to being prepared to handle any unexpected costs that life can throw at us.

Cash flow forecasting – the step-by-step process

Create a base plan: This will include a detailed account of your current financial situation, clear financial goals and short and long-term objectives that need to be met in order to reach those goals. Consider it a big-picture view of your finances – present and future.

Optimise your plan to maximise returns: Once your base plan is established, our advisers will begin exploring different ways to optimise it to maximise your financial results. Our optimisation process involves looking for potential opportunities to grow your wealth and identifying any risks to your financial health that will need to be mitigated.

Provide financial projections: Our financial planners assess all the information encompassed in your plan to provide you with financial projections that offer insight into the sustainability of your current lifestyle and spending habits in relation to achieving your future goals.

Cash flow modelling: Working with you, our financial planners will use our cash flow modelling tool to judge the impact of different scenarios on the future on your finances, allowing you to essentially trial important financial decisions before you make them. This process is especially beneficial for highlighting any decisions and current spending commitments that could result in financial shortfall, as well as opportunities for you to reduce costs and increase your wealth.

Your bespoke financial plan is finalised: Using the extensive insights produced by our cash flow modelling tool, our financial advisers add the finishing touches to your plan to create a realistic and sustainable plan that is geared towards achieving your goals. As time passes and life changes, we continue to adapt your plan to make sure it remains aligned with your needs and on track to meet your future objectives.

Guidance on cashflow modelling from the FCA

In March 2024, the Financial Conduct Authority (FCA) published findings from their research into the use of cashflow modelling by financial planning firms, along with advice on how advisers could improve the quality of this process.

Within their report, the FCA outlined concerns surrounding firms failing to question the accuracy of client information, lack of justifiable rates of return, neglecting to plan for uncertainty, unclear communications resulting in lack of consumer understanding, and failure to adequately review cash modelling outputs.

We are pleased to see the FCA continuing to maintain high standards across the financial planning industry by holding companies accountable and prioritising client needs. As a chartered financial planning firm, we are committed to empowering clients to make better financial decisions through evidence-based advice and support.

Grow and protect your wealth for the future

With our powerful cash flow modelling tool, we can access over 100 years of historical data and economic trends to test a variety of financial scenarios and help you build a realistic financial plan that will grow and protect your wealth long-term. Get in touch to speak to one of our expert financial planners and start planning a more sustainable financial future today.

Everlong Wealth Limited is authorised and regulated by the Financial Conduct Authority (FCA) and is entered on the Financial Services Register (www.fca.org.uk/register) under reference 443209.