Indeed, cashflow advice is highly complex. A wide variety of assets including insurance policies, property and pensions must be considered. There are also tax implications and many additional macro elements that need to be incorporated into planning scenarios such as the impact of any market volatility, inflation, downturn, changes in tax regimes and the like. For advisers, it is extremely difficult to consider all influencing factors, regulations and taxation rules both in isolation and alongside each other.

A tool that can do this adds significant value to the adviser in terms of being able to plan for every eventuality while being assured of staying within compliance boundaries.

Our solution, the Cashflow Planner, is fully compliant with regulations, offers a superior user experience and is easy to understand. It offers extensive options for simulating cashflows as part of the advice process, taking into consideration the requirements of the FCA. The solution has complex algorithms, based on input data at hand as well as the regulatory framework of the FCA. It ensures that all restrictions are automatically complied with. Indeed, all values are adjusted for inflation and calculated in real terms. All taxes (including income tax, capital gains tax, lifetime allowance, inheritance tax, pension transfer fees, etc.) are considered. Specific tax bands, thresholds and rates of increase for all relevant regions can be defined. The simulation of ‘what-if ‘ scenarios such as pension transfers, income drops, changes in the death age of a customer or market crash provide a holistic simulation (see Figure 1). It is also possible to compare different simulations (see Figure 2).

Figure 1: aixigo Cashflow Planner - example illustration of ‘What-if’ simulation, ‘Market Crash’ & ‘Individual Cashflow’ scenario

The cashflow algorithm includes the following:

• Income calculation handling, containing various sources of income, different income tax bands as well as national insurance charges
• Pension simulation for the estimation of pension values and expected payouts, which is essential for retirement planning
• Asset estimation of investment wrappers, cash accounts and property. Loans and liabilities are also included
• Protection plans, insurance tax charges and estate estimation in cases of both death within and at the end of the simulation time period

‘What-if’ scenarios for the simulation of pension transfers, income drops, changes of a customers mortality age, market crash and additional individual cashflow scenarios.

Figure 2: aixigo Cashflow Planner - example illustration of a cashflow simulation comparison without the ‘What if’ scenario to the simulation including the ‘What-if’ scenario

Ease of use
Clearly striking the perfect balance between the ability to analyse the complex, but present it simply in an easy to use and understandable way is not that easy. What is extremely difficult for the adviser is even more difficult for the customer because they are less likely to have the expert knowledge.

Our tool is built to showcase the understanding of a planning expert while enabling the understanding of a non-expert. The dashboard contains only user relevant information, displayed in an easy to understand manner. We essentially transform tedious processes into efficient user-friendly solutions that significantly save time and translate complex information into an easy and simple story for both the adviser and the end customer.

Tools like this give the adviser a significant reduction in the manual processes they have to deal with. By keeping things lean and efficient, the workload of the adviser is reduced; the end result is a few clicks. As a result of the reduced effort, the adviser saves time - time that can be used to advise significantly more customers with consistently high quality advice.

The time saved can be used by advisers to better understand their customers and deliver better service.

Thus, through transparency and focus on the most essential aspects, cashflow advice becomes a user experience for advisers and a service experience for the customers. This serves to create and reinforce customer loyalty; the use of the valued digital offerings becomes a regular and satisfying part of customer activities. And satisfied customers are more likely to stay with a firm over the long term as their assets grow and the customer who feels understood remains loyal and will recommend your services to others.

Integration
Any solution also needs to be scalable and easy to integrate into existing technology solutions in order to provide for operational efficiency.

Our solution has been designed for fast integration into existing infrastructures using RESTful API technology. It can be used in advisory services as well as offered on a firm’s own website, or even as online banking service – providing the perfect opportunity to engage with customers at each touchpoint. In addition, the planner can be integrated into almost all services in the long term; the solution can be offered wherever there are contact points to the customer

A reduced version of the cashflow planner can also be placed on the website or in online banking, and thus give customers the option to play with scenarios planning for themselves. Importantly, the solution can also be aligned to future new services.

Ultimately, we live in a world of increasing uncertainty and having a tool that provides comfort for customers via knowledge is very valuable. Any tool does, however, need to be fully compliant, easy to use and understand and reliable. Today’s customers are highly reliant on advisers to get things right for them and arming themselves with such solutions is the best way for advisers to do just that and build on trust and engagement with customers.

This article is from The Wealth Mosaic's UK WealthTech Landscape Report (2020) access the full report here