Parmenion's head of strategic partnerships, Patrick Ingram, joined host Richard Allum for a lunch-hour Assembly to explore how paraplanners can approach the art of cashflow forecasting these days.
Why? Because two years ago, the Bank of England had raised interest rates to break a 1% ceiling that had been in place since February 2009.
Ten more rate rises followed. Inflation peaked at 11.1% in October 2022. The result for many investors, savers, borrowers, and anyone who bought anything, quite frankly, was a cost of living shock.
Moreover, the already unfamiliar effect of rising living and housing costs was compounded by a fiscal drag that was set to squeeze the spending power of many taxpayers: any gains in pay evaporated as personal allowances remained stubbornly static.
So the chances were that we were all living in a 'new normal' – and many would have said we were experiencing a reversion to pre-2008 financial crash 'normal'.
Cashflow forecasting in the 'new normal'What did all that mean? Well, after 15 years of low rates and barely perceptible cost of living rises, predicting the future with any confidence suddenly felt a lot more…unpredictable.
Once ultra-reliable features of a paraplanner's toolkit didn't seem half as straightforward as they once did. And that included one of the foundational elements of any financial plan: cashflow forecasting.
So in a world that continued to be beset by economic, political, and environmental uncertainty, what did a paraplanner need to know to produce a cashflow forecast that wouldn't dissolve on contact with reality?
Takeaways from this lunch-hour AssemblyPatrick explored ways of thinking about cashflow and forecasting which relied less on predicting the future and more on preparing for it. We covered concepts including:
- causes and effects of fiscal drag
- capacity for loss
- cash budgeting
- wealth ratios
- cashflows and the consumer duty
It was a 60-minute session that offered a stack of insights and practical ideas that could be applied to client cases right away – plus a discussion that underlined just how vital conversations about cashflow with clients could be.
