Why advisers must embrace financial forecasting software


In 2007, something remarkable was born: the eagerly anticipated iPhone, launched by the late Apple chief executive Steve Jobs in his usual charismatic style.

Those who could see its potential embraced it with open arms; the detractors said they just wanted a phone to make calls, receive text messages and it would be nice if it had a longer-lasting battery.

For a while, iPhone owners tried to persuade the uninitiated of the merits of the device.

Fast forward to today, and the smartphone is ubiquitous. There has been a huge pivot from resistance to full adoption, and most people now believe they cannot live without them.


The master plan

What does this have to do with financial services? It mirrors the development of financial forecasting tools.

I have stopped referring to ‘lifetime cashflow analysis’ as this sounds optional. I now say to clients: ‘I will create a master plan of your finances using financial forecasting software.’

I have been using the software for almost six years. It allows me to create complex workable financial plans, which accurately reflect the full universe of financial rules and tax regulation, in a matter of minutes.

Best tools for the job

Computers thrive in complex environments, while humans thrive in environments full of emotion: they enjoy connecting the pieces and achieving outcomes, and can be behavioural and emotional experts.

But both sides of the coin are needed. Using financial forecasting software is the only way we can do this job correctly; without it we are just guessing.

People in all walks of life are resistant to new technology and advisers are no different. I would estimate there are around 21,000 client-facing advisers in the UK.

Of these about 3,000 are signed up to use comprehensive forecasting software, but probably only a few hundred have really mastered it.

It is a new skill to learn and can be difficult to master, but it is not impossible.

I have coached lots of financial advisers in their quest to embrace comprehensive financial forecasting software in their businesses. I have trained certified, chartered and award-winning advisers who struggle to embrace forecasting tools fully.

Like any skill, it is difficult to master: think of grade-eight violin or a black belt in karate.

Proper planning

I believe financial forecasting is doing financial planning properly; without it, advisers are not doing financial planning.

Giving a client a 60-page document to read, even in the certified financial planner style, is of no value. Clients need to see in pictures where their financial future lies. Advisers must use nimble software to create options to navigate this future.

Financial regulation and tax matters are complex, so financial forecasting tools also need to be complex.

All financial advisers who are working with clients on an ongoing basis, not just in the transaction of products, will need to embrace comprehensive forecasting software fully.

Advisers are experts and this should never be forgotten. However, we can leverage the power of computers to help us advise clients now and in future.

The ongoing regulatory changes in financial services are huge, so plans need to be fluid in nature. It is likely we will look back and laugh at the thought of there being any resistance to using this technology.

A perfect match

A similar example can be seen in the online dating space. Five to 10 years ago, people were considered odd or desperate if they met their partner online. Today, it is seen as rather old-fashioned to meet a partner in a nightclub or pub.

My thinking is always led by the question: what will be the standard in the future? If the answer is clear, I want to do it now.

It is clear that technology is disrupting every profession on the planet. Taxi company Uber, for example, wants to take over the entire global mini-cab business with its unlicensed driver model based on a smartphone application and customer ratings.

Uber has shaken up the long-established taxi industry, so why would financial planning, which is more complex and multi-layered, have special immunity to technological disruption?

IFAs must accept that forecasting software is the future and adjust accordingly if they do not want to be left behind.

Advisers who do not use cashflow tools might find all this an affront. I would be happy to hear what those who disagree believe to be the solution.

Clients have been short-changed for too long in financial services, and we owe it to the public to skill up to deliver the best financial planning advice and guidance.

Why would an adviser not use financial forecasting software to help them do this?

Andrew Hart is a financial planner at Serenity Financial Planning and TheVoyantist.com.

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