Cashflow planning – the best kept secret in financial planning?

“Is it a truth universally acknowledged that those in possession of a good fortune must be in want of financial advice?”

There may have been a time when such “universal acknowledgement” was restricted to financial advisers – but now the government has mandated that anyone seeking to transfer an occupational pension fund greater than £30,000 must take financial advice. The regulator’s expectation is that advisers on such arrangements produce a lifetime cash flow forecast for transferrers – a process often referred to as financial planning. So, if the regulator expects those with occupational pensions to review a lifetime cashflow forecast with an expert – shouldn’t everyone else?

What is a lifetime cashflow forecast?
In theory we all know what we earn, and we ought to know what our expenses are. We should also know what the state pension is today, and we probably have a rough idea of when we’d like to retire. But what will our expenses be then? What will our pension income be? What will our investment be worth? Will I be able to afford to live? Clearly, all that depends on the inflation rate and investment returns over time as well as any planned changes in lifestyle. So, perhaps no more spending on travel to work, but more spending on green fees?

If you want to work out:

>When you can afford to retire
>How much you need to pay into pension
>How to finance your children’s education
>How much your family will need in the event of death or ill health
>What you’ll need to sell your business for
>How to mitigate inheritance tax
>What your investments might be worth in the future
>Whether you could survive a nasty financial shock

..and perhaps most importantly to then be able to “stress test” all your assumptions, you probably need to talk to an independent financial adviser about setting up your own financial plan.

Check out Money Talk on Friday July 20th at 13.00 to find out more.