Having Enough Isn't Enough

Watch the full video here: https://bit.ly/4kaQN5k

FINANCIAL PLANNERS - Cashflow modelling software, on its own, is pretty useless.?

And that comes from someone who designs it for a living.?

In essence, it’s a professional tool to aid in the provision of a solution for the client.?

Every profession has something similar. Some way of calculating how much needs to be put in (X), to get what is needed out (Y).?

For example, a Civil Engineer uses software to calculate how much concrete and steel is needed (X) for the bridge to stand up (Y).?

The software comes up with the answer (X), and that is all the customer needs to know.?

They don’t need to be shown the calculations you’ve done or the pretty bar charts because, well... that would be narcissistic and weird.?

Also, all the customer wants to know is: ‘How much concrete and steel is needed for the bridge to stand up?’?

To calculate what ‘enough’ looks like (X), we need to know the detail behind the (Y).?

The specification, if you like…?

• How long is the bridge??

• How many vehicles will drive over it??

• What is the maximum weight it will need to take??

• What are the environmental factors, wind speed, ground conditions etc?

This goes in the software, and it comes up with the answer of how much concrete and steel is needed (X).?

In Financial Planning we sometimes get so chuffed that we have a doozy software system with colours and bar charts that we forget that we need the (Y) to calculate the (X) and instead put in the (X) and see what comes out.?

But it’s not for the client to tell you whether they like any one of a thousand outcomes.??

It’s for the Planner to help the client define the outcome they want (Y) and then show them how to achieve it (X).?

As Financial Planners, we need the ‘FOR WHAT?’ (Y) just as much as the Civil Engineer does.?

• How long is the bridge? (How long might we live?)?

• How many vehicles will drive over it? (What does a great day-in-your-life look like?)?

• What is the maximum weight it will need to take? (What big ticket stuff do we want to cater for?)?

• What are the environmental factors, wind speed, ground conditions etc? (What do we need to account for that is out of our control - inflation, market movements etc).?

So, next time you’re driving over a bridge, have a think about how you hope they did the calculations… either:

• They calculated how much concrete and steel was needed for it to stand up.?

Or...?

• They put some concrete and steel in and are waiting to see whether that was enough for it to stand up (but if not, they have a pretty chart to help show you why you died).?

Happy driving!

FINANCIAL PLANNERS - Be honest, do you think cashflow modelling is sometimes over-relied on in Financial Planning?

Are we using it as a tool to support great advice, or are we letting the software do the thinking for us?

Drop your thoughts below!?

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Watch the full video here: https://bit.ly/4kaQN5k