Imagining what life could look like many years from now can be daunting. Indeed, your clients’ income, personal circumstances, and aspirations could all change over time.
As such, planning financially for the future is often complex and uncertain.
However, while no one can predict what lies ahead, financial planners have a powerful tool for helping individuals prepare for unexpected events: cashflow modelling.
This advanced software can provide your clients with a visual picture of their financial futures. Moreover, a financial professional can use this technology to model how different scenarios could affect an individual’s lifestyle and help them create actionable strategies for managing such change.
Keep reading to learn three ways cashflow modelling could boost your clients’ confidence in their financial futures.
1. Remove uncertainty about their retirement income
According to the findings of a recent study by Oxford Risk, published by IFA Magazine, half of over-55-year-olds in the UK are worried about running out of money during retirement.
Cashflow modelling could remove this uncertainty by allowing your clients to accurately estimate how much wealth they need to achieve their retirement goals and put relevant action plans in place.
A financial planner starts the process by inputting client data such as:
- Income
- Expenditure
- Assets
- Liabilities
The sophisticated software will then project future income and expenses over time, taking into account key factors such as the anticipated return on investments, inflation, and tax liabilities.
This produces a detailed cashflow forecast that uses visual tools, such as graphs and charts, to show your clients whether they’re on track to achieve their desired retirement lifestyle.
If the forecast highlights a financial shortfall, this gives your clients the opportunity to adapt their financial plan accordingly. For example, they might decide to increase their pension contributions or adjust their investment strategy to bolster their retirement fund.
Having a robust plan in place for achieving their retirement ambitions could help your clients feel more confident about the future.
Read more: Are your clients uncertain about the future? A financial planner can bring peace of mind
2. Create an estate plan to mitigate Inheritance Tax
Your clients’ beneficiaries could face an Inheritance Tax (IHT) bill if their estate exceeds certain thresholds when they pass away.
In the 2025/26 tax year, the first £325,000 of an individual’s estate is not usually subject to IHT – this is the “nil-rate band”. Your clients’ estates might benefit from an additional “residence nil-rate band” of £175,000 if they pass on a main residence to their direct descendants (children or grandchildren).
Married couples and civil partners can combine their IHT allowances, potentially passing on up to £1 million tax-free.
Any amount of your clients’ estate that exceeds these thresholds is usually taxed at 40% (2025/26), which could reduce the amount of wealth they pass on to loved ones.
A financial planner can use cashflow modelling to give your clients a clear understanding of their assets and how close they might be to the IHT thresholds. This could help them make informed decisions about IHT mitigation strategies, such as gifting some of their wealth during their lifetime.
Modelling different scenarios could also highlight potential risks, such as failing to plan for long-term care, allowing individuals to leave a meaningful legacy without compromising their future financial security.
3. Prepare for potential later-life care costs
An often-overlooked aspect of financial planning is preparing for potential later-life care costs.
Unfortunately, these can be significant. According to Lottie, the average weekly cost of living in a UK residential care home in 2025 is £1,406. However, costs vary depending on where your clients live, so some may face higher charges.
Moreover, Labour have scrapped plans to cap care fees, which would have limited an individual’s lifetime liability for personal care costs to £86,000.
If your clients fail to prepare for such expenses, they may have a higher risk of running out of money as they get older. Additionally, any legacy they plan to leave could be diminished or wiped out altogether.
Cashflow modelling can provide clear forecasts of potential outgoings across different “what if” scenarios. This could enable your clients to assess whether their assets and income streams are sufficient to meet these costs (without jeopardising their legacy plans), and if not, take action to build an adequate safety net.
Get in touch
If you’d like to find out more about how our financial planners can use cashflow modelling to help your clients face their futures with confidence, we’d love to hear from you.
To learn more about how we can help, please email hello@sovereign-ifa.co.uk or call us on 01454 416653.
Please note
The information is aimed at professional clients only.
This article is for general information only and does not constitute advice. The information is aimed at retail clients 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, or tax planning.
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. Past performance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
Approved by Best Practice IFA Group Ltd on 13/10/25