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“You can always amend a big plan, but you can never expand a little one… I believe in plans big enough to meet a situation which we can’t possibly foresee now.”

These are the words of former U.S. President Harry S. Truman, and wise words at that. There’s more to this than your usual quote on planning. We’re living in an era of inspirational Instagrammers who fill our timelines with life-affirming messages from the second we check our phones in the morning [“Never begin the day until it is finished on paper” ― Jim Rohn, entrepreneur] to the moment we tear ourselves away from them at the end of the day [“Never look back unless you are planning to go that way.” ― Henry David Thoreau, essayist and poet]. It can be easy to get a bit numbed by the bombardment.

We all know that planning is important, so a lot of these quotes are often nothing more than fancy word play. But Harry Truman’s words stand out, for two reasons…

Planning for the Unpredictable

First, he understands the power of a big plan, a far-reaching plan, one that genuinely looks many years ahead. Thinking of our financial planning, it can be all too easy to get caught up with the immediate concerns of our lives (the monthly mortgage, school fees, next year’s holiday abroad) so there can be a tendency to deprioritise the further future to meet the demands of the here and now. As advisers, our job is to remind our clients that even the day-to-day decisions need to be taken with an understanding of how they may impact on our future wealth and security.

Secondly, Truman understands that the role of a plan should be to help you to take into account what can’t be predicted. This is the bit that often gets overlooked. It’s all very well preparing for what you know is going to happen, that’s easy. (Although the weather events of last week, i.e. snow in the winter, seemed once again to take our nation’s train operators by surprise, but I digress…). A good plan should help you prepare for whatever comes along and be flexible enough to adapt to any eventuality on the way.

Lifetime Cashflow Modelling

Of course, this isn’t easy and demands some thought, which is why we use a process called Lifetime Cashflow Modelling to help our clients put a financial plan together. It offers a helping hand when it comes to getting financially well organised by illustrating the effects of pretty much any financial action or change to our plans, at any point in our lives.

We are able to help clients plan ahead for all life’s challenges and opportunities and answer questions like when they’ll be able to retire, the rate of investment return they need, the amount of risk they should be taking, how to provide adequately for their family, and how they can mitigate the effects of Inheritance Tax on their estate.

Progeny follow the following steps to help you get organised:

  1. Discovery and goal setting – It important that we understand everything about you and your family. We review your current financial situation by gathering as much information as we can about your circumstances. It’s worth being as meticulous as possible at this stage, as the more detail we can collect about you, the more accurate your lifetime cashflow model will be.Then we establish what you want to achieve – what your life goals are for you and your family. These may be as simple as travelling the world in retirement (or sooner if desired), buying that vintage sports car, Gifts to children or leaving money for your grandchildren’s school fees. In many cases they can be complex such as when should I sell my business; can I give more to charity etc– whatever’s important to you needs to go into the plan.
  2. Assessing risk – Careful scenario planning, in turn, leads to the assessment of risk tolerance. Risk and return go hand-in-hand, so we establish the amount of risk that you are comfortable with and how much risk you need to take in order to achieve your goals. We use an emotional risk assessment tool to calculate this. You may find that the level of risk you think you’re comfortable with is not quite accurate!
  3. A thorough plan – Once we have gathered all the information we need, we create a a lifetime cashflow plan. As it has everything about you it is a living, breathing plan where the effects of inflation and the growth of investments are automatically factored in, as are lifestyle changes as they develop.
  4. Scenario planning – As well as the ‘what is’ of your life, we look at the ‘what ifs’ too. This is how we build alternative solutions and options into the projection for those occasions when events might not turn out quite as you expect, and life throws you a curveball or you want to change elements of your life and want to understand the financial ramifications. This is critical to the process! – as Harry Truman knows “it’s in dealing with the curveballs where a plan shows its real value.”
  5. Regular reviewing – We encourage clients to review their plan regularly, to ensure it remains on track and in step with their life. It’s important that the reviews strike the right balance between being regular but not too frequent. There will always be changes in circumstances, tax, assumptions used, and investment returns so regular reviews of the plan may help achieve success in the long term.

Lifetime Cashflow Modelling helps develop an organic and responsive financial plan with the flexibility and foresight to deliver what you’re seeking from your wealth today and tomorrow. If you would like some help in organising your finances and investments and building a plan for life, please get in touch. We’d love to speak with you.

This article does not constitute financial advice. Individuals must not rely on this information to make a financial or investment decision. Before making any decision, we recommend you consult your financial planner to take into account your particular investment objectives, financial situation and individual needs.

This article is distributed for educational purposes and should not be considered investment advice or an offer of any security for sale. This article contains the opinions of the author but not necessarily the Firm and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable but is not guaranteed.

Past performance is not indicative of future results and the value of investments can fall as well as rise. No representation is made that the stated results will be replicated.

Andrew Pereira

Director, Wealth

Andrew has been working with families, high-net-worth clients and business owners for well over 20 years.

Learn more about Andrew Pereira