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Forward Thinking Magazine : April 2011
54 How long have you offered this service? John: 15 years. “Cashflow is a critical part of our service.” Sam: Since inception. “We believe that cashflow is a key component of wealth creation.” Who do you target? John: • 35-50 year olds, significant income, mortgage, kids. • Generation Y – young people saving to buy a home. Sam: • Core target is wealth accumulators and professionals – doctors, solicitors. • One niche group is divorcees – who need advice for their changing financial situation. How do you charge? John: Annual service package fees are direct debited from the client’s Macquarie account in monthly instalments. Sam: A flat dollar fee according to level and frequency of service. What technology do you use? John: WB Financial’s own proprietary software, MyCashflow. “We need the technology to support us because clients now have a real-time expectation of the service.” Sam: Como’s proprietary software Cashtrack. “It’s a very visual tool I think to actually demonstrate to the client – as you can see this is what you’ve spent – it’s in black and white.” How do you track cashflow? John: Clients have an administration account, often a Macquarie Cash Management Account (Macquarie CMA). Once a month, clients enter their transactions into MyCashflow software, which provides projections on income, expenditure and cash reserves. “It has a disciplinary effect. It is like the monthly weigh in at the gym, in as much as they sit down and can’t believe what they’ve spent.” Sam: Everything is set up automatically, often using the Macquarie CMA as a cash hub, with monthly or weekly payments to transaction accounts for discretionary and fixed expenditure. “It just happens in the background. Simplicity is absolutely key.” Clients download transactions, upload them into Cashtrack and allocate the type of expenditure. The system recognises expenditure it has seen before. What about review time? John: “It is people management, not money management. So there’s no doubt that it requires regular conversations and regular contact with clients... We talk extensively with clients and sometimes it will take up to two to four years before the clients themselves will have confidence in their cashflow.” Sam: “It’s a really productive meeting. We can see if their targets are being met or not, so we can make some proactive decisions then and there...clients love it, they really do.” Implementing the system A robust cash management system belongs at the heart of every client’s portfolio. But how can this work in your business model? We spoke to John Stinson, WB Financial and Sam Hunt, Como Financial Services about how they have implemented the system. Both advisers offer a similar approach, albeit to different client groups. In contrast, Your Personal CFO offers a different approach for high net worth clients. Peter Wilson explains that it provides “a fully outsourced solution for clients and their advisers which includes the payment of bills, reconciliation of incomings and outgoings, cost reviews of service providers and robust monthly reporting of actuals versus budget”. So what are the common themes? Cashflow planning resonates with clients, they value the advice and it generates significant referrals to grow your business. However, client education and technology are both key to building an efficient cashflow system into your practice.