Cash Flow Modelling

What goes into a cashflow model

This model factors in your pensions and their likely growth, existing savings and investments, expected income including the State Pension, ongoing and one-off spending, inflation, and any known future changes, such as an inheritance, a house move or financial help for a child, or loved ones. The output is a year-by-year projection, shown as a chart of your financial position stretching into the future, so you can see at a glance what the financial future looks like.

What Can Cashflow Modelling Help With?

Planning for retirement

Cashflow modelling is central to our Retirement Financial Planning work. It allows us to assess whether your current resources are likely to support your desired lifestyle throughout retirement.

Using your income, assets, expenditure and objectives, we create a financial forecast and then stress-test it against a range of scenarios, such as market downturns, changes in spending, future care costs and different investment return assumptions. We can also assess your spending capacity and the level of investment growth required to achieve your goals.

This helps you understand the potential impact of different decisions and provides a clearer picture of your long-term financial security.

Planning a business exit

For business owners considering an exit, cashflow modelling can help answer one of the most important questions: “How much do I actually need to sell my business for?”

This matters before negotiations even begin. Sale proceeds are rarely a simple lump sum in the bank: tax, reinvestment needs, and how the money is drawn down over decades also affect what a given sale price actually means for your day-to-day life afterwards. Read more: Financial Advice for Business Owners & Executives.

Gifting and intergenerational planning

Before gifting money to children or grandchildren, a cashflow model shows whether you can afford to, both now and  into the future, factoring in potential care costs, inflation and market downturns. Read more: Intergenerational Wealth Planning.

Stress-testing your plan

Once a model is built, we test it against scenarios such as a market downturn, needing long-term care, living longer than expected or an unplanned major expense so you understand not just the likely outcome, but how much margin you have if things don’t go as planned. A plan that only works in the average scenario isn’t a robust plan; testing the less comfortable scenarios is where genuine confidence about the financial future comes from.

Who cashflow modelling is for

Cashflow modelling is relevant to everyone.  Whether you are in your thirties and deciding how much to save each month or are in your fifties and thinking about retiring. Younger clients typically use it to test different saving and investing strategies; those closer to retirement use it to test a specific date and spending level; business owners use it around a sale or succession; and those who are looking to gift money often use it to work out, precisely, how much they can safely give away during their lifetime.

A common misconception: “A cashflow model is a one-off exercise”

A cashflow model is only accurate for as long as the assumptions behind it hold true, so it needs updating as your circumstances, and the wider economic picture, change. It shouldn’t be filed away after the first meeting. We recommend revisiting your model at least annually, which we would do as part of our annual review process, and after any significant life event.

How We Build Your Cashflow Model

Building a reliable model depends on good information going in, and honest assumptions throughout.

1. Gather your information: current assets, income, expenditure and any known future changes, ideally including old paperwork for pensions and investments you may have lost track of.
2. Build the model: we produce a year-by-year projection of your financial position, based on reasonable assumptions about growth, inflation and spending, shown as a straightforward chart.
3. Stress-test the scenarios: we test the model against market downturns, unexpected costs, and different retirement or spending dates, so you see a realistic range of outcomes rather than one optimistic projection.
4. Review regularly: we update the model at least annually, and whenever your circumstances change, to keep the picture accurate: personal circumstances shift, and last year’s assumptions can easily become out of date.

Why Choose Nelsons for Cashflow Modelling

• Holistic Advice and Collaboration: As part of a full-service law firm, we seamlessly integrate both the financial and legal aspects to create comprehensive solutions, saving you valuable time. We can also work with your existing accountant, solicitors or other advisers if you wish.
• Unbiased Expertise: As independent financial advisers, we are not tied to any product providers or banks, which allows us to offer you truly unbiased and objective advice, meticulously tailored to your specific needs.
• Advice with genuine technical depth behind it: several of our advisers, including Zoe Till, who heads our team, hold Chartered Financial Planner status through the Personal Finance Society, the industry’s recognised marker of technical depth and professional standards.
• Our charges aren’t linked to your investments: we charge a fixed fee for our services, based on the complexity of the work involved. You’ll receive a fee quote before we undertake any work, so you know exactly what to expect.
• Determining the right fit: The initial consultation allows us to understand your needs and objectives in greater detail, while giving you the opportunity to decide whether our service and expertise are aligned with what you are looking for.
• Rigorous Investment Oversight: Our investment committee meets on a regular basis to diligently review and research our model portfolios. You can rest assured your investments are in capable hands.
• Local and Ongoing Support: offices in Derby, Leicester and Nottingham mean we are available for face-to-face conversations. You can also contact your adviser and our support team at any time and review your finances via our dedicated Portal.
• Real protection if something goes wrong: we are authorised by the Financial Conduct Authority (No. 523173).  This means you have access to the Financial Ombudsman Service and the Financial Services Compensation Scheme which is, protection you don’t get from unregulated advice.

Ready to See Your Financial Future Mapped Out?

Now you understand how cashflow modelling works, take the next step.

• Call: 0800 024 1976
• Online: our enquiry form