Case study: Cash Flow

Ridgeways Financial Planning

I have been able to intuitively use it. It’s easy - certainly the easiest cash flow modelling tool I’ve used. Another tool might be all singing, all dancing, but have you really got the time to learn its intricacies, to make full use of it?
David Mills, Ridgeways Financial Planning
Ridgeways Financial Planning
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How easy is Dynamic Planner Cash flow to use?

From a UX point of view, it’s very, very good. Without any major training – simply a quick walk through of how it works – I have been able to intuitively use it. It’s easy – certainly the easiest cash flow modelling tool I’ve used in my career.

Another tool might be all singing, all dancing, but have you really got the time to learn its intricacies to make full use of it? With Dynamic Planner, you can pick up and use it straight away – and, almost certainly, in my view, with more relevance for the client, because it links to volatility within their investments.

Does it encourage client engagement?

Already with a client, I’ve had Zoom meetings and been able to share my screen and make adjustments and show the client the impact of them there and then. It’s straightforward as an adviser to do and the feedback so far from clients, they’ve said it’s absolutely superb.

It helps me a deliver a fully holistic, advised process. Rather than providing investment advice in isolation, I can now link it to a client’s income objectives and show graphically that they can achieve their objective by following my advice.

It’s more engaging for the client, that they can see graphically the impact of fund performance and adjustments over time on their overall plan. Ultimately, Dynamic Planner’s new cash flow has already helped me enhance my service and deliver better advice for clients.

How useful are ‘life phases’?

The life phase slider is exceptionally useful, because of course clients do have different life phases, which result in different income and expenditure needs. It’s easier, from the perspective of an adviser, to have those clear life phases and to be able to link income and expenditure to specific ones. It’s easier then also to quickly adjust the plan and show a client what would be the impact if, for example, they started taking their drawdown income sooner. From the client’s perspective, it’s better, because they get to clearly see that journey too.

Does it help, being integrated with the rest of Dynamic Planner?

It’s nice it has the same theme and layout as the rest of parts of Dynamic Planner, like the Client Review. All your clients’ data feeds into the new cash flow, avoiding any rekeying or entering data incorrectly. It’s all prepopulated. That’s extremely helpful, from a user experience and saves a huge amount of time.

If you are able to prepopulate, a new cash flow plan for a client only takes 10-15 minutes, which includes the time it takes for you to sense check it. You’re saving the time on manual inputting and on assuming growth and inflation rates etc.

Having one consistent tool and process, which Dynamic Planner provides – for risk profiling, for fund research, for reporting and now for cash flow planning – cuts down on extra administration and internal training at your firm. It cuts your costs as a firm, because you’re not paying multiple providers for different tools.

It also provides your clients with a consistent experience and you as a firm with a consistency of client proposition. Cash flow planning is very, very important for a client, so that you can show them the impact of increasing their current pension contributions, for example, 30 years down the line.

Dynamic Planner Cash flow is risk-based. How helpful is that?

The key win for Dynamic Planner Cash flow modelling is that it is based on the volatility of either the client’s funds themselves or the volatility of the benchmark asset allocation for their risk profile. That is a superb improvement over simply assuming a flat, growth rate of 3%, for example for a client’s investments.

That’s important, because, one, flat growth takes no account of sequencing risk and, two, where do you get that assumed flat growth from? Are you just plucking it out of the air? It’s dangerous. If you were, let’s say, to do your own maths correctly here, the time that would take would very likely be disproportionate to the charges you’re earning from the client.

Dynamic Planner’s cash flow carries out on an underlying, mathematical calculation based on the volatility of funds or an asset allocation mapped by Dynamic Planner.

From the perspective of a client, particularly in drawdown and a compliance point of view, that is absolutely superb – making sure you’re providing the client with the best possible advice and also evidencing either the continued suitability of drawdown or whether modifications need to be made to increase the chances of the client achieving their overall objective.

With assumptions built in and linked to funds and a benchmark asset allocation, that prevents inconsistencies in your process across advisers at a firm. To avoid doing that when assuming your own growth rates for cash flow, you would have to agree on those rates at a firm level – otherwise, two clients at the same risk profile could get completely different cash flow projections, because two advisers assumed different growth or inflation rates.

How dangerous is it, to assume growth rates for a client?

It’s potentially extremely dangerous for a client and the firm, because it can either under or overstate risk for the client. Cash flow planning deals in decades. If you haven’t taken into account sequencing risk or you’ve made incorrect assumptions about inflation, for example, it can have a devastating impact on the long-term sustainability of income for a client.

Previously in my career, I have never liked inputting my own assumptions for cash flow planning. I have wanted something like Dynamic Planner’s cash flow to come out for a very long time. That’s why it’s so good it has now launched. If a client did make a complaint about you and your firm, your assumptions in cash flow planning could easily be challenged, because the underlying advice you have given is determined by it.

From a compliance perspective, Dynamic Planner’s cash flow modelling is far better – putting you at a far lower risk and also helping protect your firm’s reputation as well. From a client’s perspective, you’re far more likely to deliver a better outcome.

What do you think of the client reporting?

Clients have received the cash flow report from Dynamic Planner extremely well. They find it useful. I think the key thing is that it allows me to show a client graphically why I am recommending a course of action, which is important, because previously I have had clients who have been adamant that they wanted to take one approach.

Now, in Dynamic Planner, you don’t have to just tell them why you think that’s not a good idea – you can show them. That ultimately enables you to deliver better client outcomes.

Would you recommend Dynamic Planner Cash flow to a fellow advice firm?

Yes, 100%. We really like it.

How has Dynamic Planner helped your firm in 2020?

Dynamic Planner has been tremendously helpful and time-saving in 2020. Given coronavirus, having a system where you can share your screen in a Zoom meeting and present to clients professionally graphs of their portfolio’s performance, its asset allocation and so forth, and have a subsequent discussion around that has been very well received.

Clients have been tremendously happy – they’ve said let’s do this again by Zoom after lockdown. That then cuts down on your time as a firm travelling alongside other admin costs. From that point of view, it’s superb.

Adopting Dynamic Planner is one of the best things we’ve done in years. Dynamic Planner’s continued innovation is fantastic. And the fact that they engage with you as a user, to ascertain what improvements would be best from an advisory perspective – rather than simply provide a product in a one-way process – is brilliant for us, because it allows us to ultimately have a tool which is so useful for us.