How cashflow modelling can improve your clients’ experiences

Many of your clients’ legal cases involve complex financial outcomes that require careful planning.

Whether a client receives a lump-sum settlement, experiences a significant reduction in their wealth, or sees a change in their finances, they will need to develop a plan that reflects their new position.

This is where financial planning and cashflow modelling can be invaluable. By modelling a range of outcomes, these tools can provide greater certainty at a time when important decisions need to be made.

They can help clients understand the long-term implications of their settlement, assess whether their goals remain achievable, and make informed choices about the next steps to take.

Read on to find out how cashflow modelling can improve your clients’ experiences.

Cashflow modelling can help clients visualise and project their long-term outcomes

Cashflow modelling is a financial planning tool that projects how wealth may rise and fall over time, based on a client’s circumstances and lifestyle, as well as factors outside their control.

When using cashflow modelling, we look at the client’s current financial standing, including their:

• Income
• Pensions
• Expenses
• Savings and investments
• Long-term goals

We then project how their finances could play out over time based on their decisions and other variables, such as:

• Inflation
• Market performance
• The client’s life expectancy
• Potential care costs

By exploring all of these factors, clients can visualise their long-term financial outcomes, and how different decisions could impact their progress towards their goals. This could include:

• Retiring at 60 instead of 66
• Keeping or selling a property
• Accepting one settlement offer over another
• Making gifts instead of retaining assets.

Cashflow modelling can be particularly useful for solicitors’ clients

Cashflow modelling is particularly valuable for clients facing significant legal and financial decisions, where the long-term implications of different outcomes need to be clearly understood.

Clients may have endured a lengthy legal dispute, and it’s important that they make decisions based on their long-term financial security, rather than emotions.

It can be especially useful in the following situations.

Divorce

For divorcing clients, cashflow modelling can help them understand how different asset divisions may affect each party’s financial future.

A settlement may look good on paper, but cashflow modelling can reveal whether it is actually sustainable over the long term.

For example, a divorcing client may be keen to retain the family home rather than accept a share of their spouse’s pension. Cashflow modelling can demonstrate how that decision may affect their retirement income and long-term financial security before any settlement is agreed.

The clients can then start their new lives with a clear idea of their financial standing and confidence in their future security.

Personal injury

If clients have suffered an injury, it’s important that they understand their future financial needs.

If the injury was at work or due to negligence, they may be entitled to a settlement. They may also face ongoing costs if they experience a loss of earnings, have to pay for treatment, or make any housing adjustments.

Cashflow modelling can help clients build a clear picture of their future financial needs and can also be used to support settlement claims by demonstrating the financial impact.

Estate planning and social care

Clients working on estate planning with their solicitors can use cashflow modelling to understand how different strategies may unfold over time and how those plans could be impacted under certain circumstances.

For example, if they are considering gifting assets or establishing trusts, cashflow modelling can show the consequences of these decisions over years or even decades.

It can also be used to model a range of future care scenarios to show how potential care costs could affect their finances. This allows clients to make informed decisions regarding their legacy and future financial security.

Financial disputes

Clients going through financial disputes of any sort can benefit from cashflow modelling.

Whether the dispute relates to inheritance, business ownership, or the division of assets, cashflow modelling can help clients understand how different outcomes may affect their long-term financial security.

Solicitors can also benefit from cashflow modelling

As well as supporting clients, cashflow modelling can benefit solicitors.

For instance, it can:

• Provide objective evidence to support negotiations.
• Reduce the risk of clients later claiming they did not understand the long-term consequences of a decision.
• Clearly demonstrate the lasting implications of different options.
• Improve the client experience and, subsequently, the reputation of the firm.

Get in touch

If you have clients who could benefit from understanding how their financial future may play out, get in touch.

Email info@fbwealth.co.uk or call us on 0333 1122211.

Please note

This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate estate planning, cashflow planning, tax planning, trusts, or will writing.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.