How we use technology in Financial Planning


This month I provided my comments to an industry news website for financial advisers called ‘New Model Adviser’ about the technology we use in our business and why. The article can be viewed here if you fancy, however I believe it may ask you to register to view and let’s be honest, you probably enough passwords to remember already.

I’ve since received a lot a bit of positive feedback from fellow advisers so thought it might also provide an interesting blog topic for new and existing clients.

Technology in all areas of life is advancing daily and financial technology (often referred to as ‘fintech’) is no exception. To make sure we only take on the board the right tools for our business and not be tempted by everything new and shiny, we ask ourselves two simple questions:

1) Will it make us more efficient?

2) Will it provide additional value for our clients?

Technology that makes us more efficient does two things. Firstly it helps us keep our costs low and subsequently keep the fees we charge our clients low. Secondly it enables us to spend more time discussing the really important issues with our clients and less time pushing paperwork.

Providing additional value to our clients is the area I would like to concentrate on. The two pieces of technology I highlighted in the New Model Adviser article as providing the most value to our clients are computer software packages called ‘Voyant’ and ‘Timeline’.

Visualising your financial future.

Voyant is a piece of computer software that allows us to project your current financial situation into the future, see how it looks and then model changes with you, in real time, to study the effects. It’s very important that I point out that it isn’t is a crystal ball. We have to make assumptions about how your investments will grow, how quickly inflation will rise, the future of taxation and your spending patterns to name just a few of the variables. We are therefore very careful and considerate in the assumptions we use.

Once we have modelled the different scenarios with a client and agreed the best course of action, the plan of how to proceed is created.

Now this isn’t a set and forget exercise, we revisit the forecast regularly to maintain and update with all the changes life throws at us.

Our clients find huge value in being able to visualise their potential financial future and plan ahead, which is absolutely the aim of the game.

How much can you withdraw from your portfolio?

When it comes to drawing an income from a portfolio, whether that be an investment or a pension, the key question is always how much? If you take too much too early you risk running out of money before you run out of life. However, be too conservative and that could mean you may be missing out on living life. The timeline app allows us to look back at 117 years of investment market performance data and test how a specific withdrawal strategy would have fared. So if you’re 65 now and we assume a life expectancy of 95, we can look at back at all complete 30 year periods since 1900. The software runs our proposed withdrawal strategy commencing at the start of each year since 1900 to see whether the portfolio would have had money left at the end or run out early.

Now my compliance manager will almost certainly insist I insert the phrase “past performance is no guide to future performance”, which is true, but it does give us a chance to test a strategy in real world scenarios (including two world wars and the great depression!) The outcome is an historical success rate in percentage terms. This allows us to discuss in more detail with a client how a 70/80/90% success rate makes them feel and adjust the strategy until everyone is completely comfortable.

Ultimately, nothing is set in stone or guaranteed and good financial planning is an ongoing process that will need shaping and moulding as life and everything around us changes.

Both of these pieces of technology are tools we use to collaborate with our clients in an engaging and visual manner. The key to getting the most from them is for us to have a detailed understanding of our clients aspirations and concerns so that the planning is truly specific to their needs. For this, there’s no magic piece of tech to replace friendly and engaging conversation!

If you would like any help with financial planning or help visualising your financial future, contact me here, I’m always happy to chat!

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      Annetts & Orchard is a trading name of Annetts & Orchard Ltd. We are authorised and regulated by the Financial Conduct Authority. You can find Annetts & Orchard Ltd on the FCA register (FCA number 820272) by clicking here. Registered in England & Wales (11503291).

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