Client Centred Financial Planning using Cash Flow Modelling

Cash flow modelling, we believe, is the integral part of any serious client centred financial planning process.

Taking into account your income, expenditure, assets, liabilities plus future planned spending or windfalls etc, we can build a visualisation of your financial future.

The initial model leads to an in-depth conversation about what is really important to you and your family’s long-term financial plans and aspirations.

This could be whether or not you are on course for that early retirement you have been striving for, or goals within your working life, a dream holiday home, funding a wedding or your children’s or grandchildren’s education.

Cash flow modelling allows us to see how achievable your ambitions are, and if so, what actions may need to be taken to make sure you are making the most of your potential.

They also help us to understand if you are able to continue to live a good life in retirement, without running out of money or even potentially dying with too much money, leaving your estate with a possible inheritance tax issue to solve.

The next step, is then to put in place actions to make the most tax efficient effective use of your money, build confidence in your plans, and also solidify our relationship as your trusted source of advice.

The most important part of the financial planning cash flow modelling process however, is the ongoing review.

What makes it work as an invaluable tool is revisiting the model, and re-evaluating your position on a regular basis.

Regular reviews will ensure that the course of any financial plan is maintained and is able to be followed, and amended to take into account any changes in your life.

Whether your investments have increased or reduced in value since the previous year, it’s the impact on your long-term planning that we need to consider.  Annually reviewing your model helps avoid making snap investment decisions that could seriously damage long-term investment returns.

Our service is not about a single transaction.

We aim to become your trusted adviser for the long term.

By really understanding what you want to achieve with your money, for you and your families’ future, we believe we can provide the long-term advice that adds value.

Get in touch, come into our office and let us show you how we can help you by building a visual profile of your financial future.

Jonathan Beaton


What would you do with £381m?

The news over the past day has informed us of the largest ever undivided lottery win the United States of $590m (£381m), going to an 84-year old widow.dollars

Talk of the lottery is nearly always accompanied by a discussion of what you would do with the winnings…

But after you have stopped considering how to furnish the gatehouse, it is worth remembering that it doesn’t have to be a massive lottery win for your money to require due consideration.

Using our cash flow modelling tool, Voyant, we can create a wide variety of what if scenarios that project forward how different choices today can affect your financial outlook tomorrow.

Assets detailed for websiteWe can enter in information such as your incomes, expenses, assets and liabilities and model forward projections, such as those seen on the right.

Being at the age Gloria, the 84 year old jackpot winner, is she chose to take her winnings as a lump sum rather than 30 annual payments of £12m. Taking it in this manner reduced the sum to £240million.

This type of situation is similar to those faced by retirees and those made redundant every day as they must decide how best to take their benefits. This is exactly the situation where cash flow modelling can shine.

lotterywinCombining this with expert advice that guides you through an all encompassing view of your current circumstances, maybe you can generate some of your own luck.

Of course, if you are feeling lucky, we can even model a scenario where you win big…



How we can change your life this week

Much of human understanding of the world is built on models that attempt to recreate complex systems in a simpler form. This ranges from the reactions of the economy to a reduction in government expenditure to the effect of CO2 on climate change.

No model will ever be perfect as there are too many intricate relationships at play, but I am sure that most would agree that we are better to have some understanding of how these systems work than nothing at all.

Now let’s consider financial planning. It is one of those disciplines that, whether you are interested or not, it still applies to you. Every single person reading this blog will, in the simplest sense, have things they want to do, a number of years ahead of them, and an exhaustible amount of money flowing in and out.

timelineThere are different attitudes to this problem. Apathy is one. Some may not want to think about it because it will stop all of today’s fun.  Some may have a vague idea it will all work out. Some people may have fashioned a rudimentary spreadsheet in Excel to try and boil the situation down into hard numbers, but once the projections involve discounted values of future contributions and the timescale stretches out, things can get complicated very quickly.

At OAM, equipped with the market leading cash flow modelling software, Voyant, we can produce charts, projections, balance sheets and inheritance tax ledgers. We can put in key events such as weddings and the sale of a business. We can even kill you off next year, just to see what happens. We can tweak every assumption that lies behind the model to make it as realistic to your circumstances, and the wider economy, as is possible.

The level of detail is quite astonishing. Every change from HMRC on future tax rates are factored into models automatically, within days of announcement.

This week we made a big difference to a couple’s life, confirming that which they suspected: they don’t actually need to work anymore. They have accumulated more than enough to last comfortably until their assumed mortality age (itself selected by the client on the grounds of family history and the Office of National Statistics).

assetsIn the past we have helped clients assess their inheritance tax liability, choose between different redundancy options, set the amount of savings contributions required to pay for their children’s education and more.

As stated above, every model has its limitations, but it is worth coming to see us to gain some understanding of how your future looks rather than earning and spending money in the dark. And as we see confirmed every day when small tweaks are made to client’s plans, a change today can make life quite different in 20 years.

Malcolm Stewart


Guest Blog: The Mindful Way of Doing Business


martin_at_falkirk_event_Sept_09This week we are delighted to post an inspirational guest blog by Martin Stepek – award winning and critically acclaimed poet and writer and current CEO of the Scottish Family Business Association.

The Mindful Way of Doing Business

So what does a contemplative practice developed 2500 years ago by the Buddha have to do with your business?  Surprisingly a lot actually, and even more importantly, in some of the key areas of your working – and personal – life.

Tree of Half LifeMindfulness is the technique of trying to catch each moment in its entirety, without the usual inner commentary or opinion we all tend to have. So it could be just reading an email calmly and carefully, without prejudging its overall contents because of a) who the sender is, or b) our opinion halfway through the message. Or it might be becoming aware of tiredness or irritation inside our mind during an important meeting (and let’s face it if it’s not an important meeting why are you having one?)

Mindfulness also refers to the more formal practice of sitting, eyes closed but alert, and focusing clearly but lightly on the breath or on a particular thought or emotion.

We can practice mindfulness literally anywhere or while doing any activity. It’s the ultimate portable gadget. I do it while waiting for a train, while doing the ironing or the washing up, even when I first wake up before I’m out of bed.

But why should you be doing it? And believe me you should!

Mindfulness helps us in two ways; one the prevention of negative stuff, the other the cultivation of positive stuff. I use stuff deliberately as there’s a whole range of things that mindfulness concerns and affects.

Let’s look at the negatives. I don’t know anyone in business who isn’t sometimes affected by stress, 24/7 work, tiredness, frustration, niggles, irritation or anger, down to the really serious stuff of chronic anxiety, clinical depression or a sense that the work you do is shallow, unfulfilling, meaningless… and that somehow you’re missing out on the important things in life. Mindfulness deals with all this… yes it’s “stuff” isn’t it? I’ll show evidence in a moment but let’s look at the positives now.

Mindfulness develops our sense of calm focus, clarity of thinking, creativity and compassion. It enables us to remain clear-minded under pressure, make decisions more wisely, and get home at the end of the day still capable of having a true relationship. How practical is this in running a business, in living a full life? I’d argue that apart from cash flow this good “stuff” is the most important set of features a business must have to succeed.

And the evidence? There are now over 2500 scientific journal articles on these effects, from the world’s leading universities; Oxford (has a mindfulness centre), Harvard, Yale, UCLA. Glasgow University has done ground-breaking research on mindfulness, and Aberdeen University offers an MSc. The internet is awash with papers, books, podcasts, interviews and lectures. Check them out.

I’ve been practicing since 1998, teaching it since 2004, to businesses, charities, social enterprises, schools, even Shotts Prison. I teach a free drop-in class on Tuesday evenings at 6.30-7.30pm at the University of West of Scotland in my home town of Hamilton. Mindfulness has helped me lead a national business support organisation, publish an award-winning reflection on my father as a Soviet labour camp victim, and much more beside, while still hopefully being a happy, contented and loving father, husband and friend.

As I said, you really should try it!


Changing the Weather

That’s it.

I’ve had about as much as I can stand of the Scottish Spring weather. Grey, overcast, wet, windy, freezing, sunny, & generally miserable.

With damp patches.

No amount of positive mental attitude will change the weather but a wee bit of planning might change where the weather I’m exposed to comes from…

It’s been very noticeable of late that the new enquires we have been getting are less concerned with the true nitty-gritty of what my pension/ISA/savings actually are but much more around the use of lifetime cash flow modelling to show me what’s going to happen.

The term peace of mind is often used in conversations with new clients and it’s very interesting that successful, well paid business men & women drive on without a real understanding of what their numbers actually might mean for them.

In other words, they have no peace of mind but rather a nagging doubt that it might not just be enough.

Using a complex powerful cash flow modelling tool like Voyant provides the framework to allow a little dreaming to take place and it’s a tremendous feeling to see people starting believe they might just be there financially or with a bit of further guidance they can get the life they want.

clear skiesOur job is then to become custodian of the wealth, provide sensible investment strategies and use the tax advantages of various “wrappers” to keep the clients in the style to which they’d like to become accustomed!

Malcolm Stewart will be expanding on the details on how, what and why lifetime cash flow modelling is so powerful in his next blog.

In the meantime, as I write the temperature in Sacramento, California is a sunny 33c.

Call me to arrange your retirement in a country and climate of your choosing.

Roland Oliver


Modelling Your Estate and Inheritance Tax

We are currently carrying out a large exercise for a client to ensure that the inheritance tax on her estate is mitigated as much as possible.

As well as taxation and trust work, the use of our cash flow modelling system has become an important part of this.

We are able to enter all of the client’s assets into the system and simulate an immediate estate scenario (a nice way of putting it!). This provides balance sheet style view of everything that needs to be taken into account, and performs the appropriate calculations. Any beneficiaries of the estate can also be entered into the planning, as well as potentially exempt transfers.

Please click on the image below for a basic example of this.

In this case, the estate will be distributed to two children, John and Jen. The system automatically collects anything that would be part of the estate and performs the calculations. This can be as simple or as complicated as necessary to correctly simulate your planning. The detail can drive down into the way certain policies are set up. For example, the Whole of Life insurance policy that the example client above holds is written in trust, and therefore the payment is outside of the estate.

The example above shows one solution in inheritance tax planning, whereby the £100,000 Whole of Life policy in trust pays out enough to cover the inheritance tax charge of £94,140.

For a detailed look at your inheritance tax position and to see what we can do for you please get in touch.



Can Your Planning Withstand a Major Loss Event?


Meet John, 56, and his wife Janet, 54. John runs ABC Ltd, a company which provides high quality examples in many business settings. Janet is a civil servant.

They have 3 children: Jill, Jenny and Johnny. They will all have flown the nest by the time John is 62. At this time John and Janet plan to travel and spend more for six years. Following this they plan to downsize their house.

They have various investments in the stock market, including John’s pension, although Janet is lucky enough to have a final salary pension. They like to take a medium-high level of risk with their investments.

Assuming the economy and the stock market proceeds at a general average over the remaining period of their lives they will be in good shape, with no deficit at any stage.

Modelling a major loss

Once the media start focussing on other things it’s easy to forget that there is still a substantial chance that Greece or many others may drop out of the Euro, triggering a mechanism that will essentially send confidence back to levels seen earlier in the year, or worse. I won’t get into too much speculation on that because a major loss can come from anywhere when we least expect it.

So is your financial planning robust enough for a tornado to tear through Canary Wharf?

John and Janet would like to know, and we can help them run one of many scenarios.

Let’s say our disaster event creates the following effect: a 3 year loss of -35%, -25% and -20%. This occurs when John is age 60 (in 4 years).


Each investment in the stock market that John and Janet have has been modelled as close to reality as possible in terms of asset allocation, and based on statistics from Novia Market Assumptions.

Each of these investments will be automatically affected by our loss simulation above.

So what do we find out?

Figure 1






Figure 2







In the cash flow chart we can see a period of red setting in from age 77, unlikely the status quo base plan chart from above.

The effect is more strongly seen in the liquid assets charts, with usable funds running out at age 76.

In the base plan the growth rate was 6-7%. Once we factor in that this major loss will occur, we see that 9.06% growth is required on these assets from the start of the plan, or 10.57% is required once the major loss has occurred, to ensure once again that there will be no shortfall.

So what does this mean? Well, for John and Janet, they would likely have to downsize again at age 77 to free up more liquid assets.

What would it mean for you?

Get in touch for a comprehensive look at your planning.

Malcolm Stewart


Multiple Income Streams

How do we get clients over the often held view that pensions are “rubbish”?

A by-product of the product lead sales approach, is to focus on the “thing” not the outcome – “I’ve ruthlessly and with malice aforethought, researched the market and have selected Split Pea & General as having the best pension product for you…”

Even writing this leaves me stone cold, imagine it from your client’s point of view.

We’re totally committed to cash flow modelling as the correct approach when visually demonstrating financial planning to clients here. The more we use the cash flow models with clients, the more obvious it becomes that once you demonstrate that a pension is just an income with a different name, all the scales fall away.

People get the picture pretty quickly when they can “see” what a pension can do for them and get the tax advantages too.

Rather than focus on the swamp that pension income options can be, we tend to talk about Multiple Income Streams that are required when you decide not to work anymore (not retire) and how to put these building blocks in place.

We have found that having the client’s focus more on how much they need by way of fund or income when they stop working, tends to work better.

We set out a program in which the clients use all the tax wrappers (Pension, ISA, OEICS,Bonds etc) in an appropriate time and manner for them and this ensures that the we are able to use the Multiple Income Streams to create the tax optimised replacement for income  in retirement (there, I’ve said it!)

We don’t dumb-down the detail but once we’ve established the high ground its an easier conversation. We also work hard in not overloading on tech talk or jargon when discussing the nuts and bolts.

A form of Plain English if you will and it’s always good to ask a client to briefly explain back to you what you’ve discussed and find that a good understanding have been established.

If not, I would always go back and cover the areas of difficulty again.

It’s never to patronise, but more for my peace-of-mind that I’ve been able to get the information required across to the clients in order they can make the correct decisions for them about the advice being offered.

We also use our cash flow software to demonstrate the way income will be delivered to them and the likely tax treatment.

It pulls together the concept of the Multiple Income Stream theory and the notion of a controlled replacement for income once you stop working.

You might even think pensions aren’t so bad after all.

None of this is new, earth-shattering or dangerous thinking, but then again providing sound financial advice doesn’t have to be complicated.

Roland Oliver