View the article online at http://citywire.co.uk/new-model-adviser/article/a660363
Diary of a Life Planner: Costa coffee or Costa del Sol?
by Chris Mellor on Feb 26, 2013 at 11:33
‘No legacy is so rich as honesty.’
William Shakespeare, All’s Well That Ends Well
I received an email recently from Peter and Sue thanking me for taking them through the cashflow modelling process.
‘Thank you for the time spent with us on Friday. Having entered your offices with some trepidation – you know how much money management scares us – we must admit to being pleasantly surprised and reassured by your presentation.’
Lifetime cashflow and wealth modelling is a fundamental tool in pulling any client’s life plan together. This couple, by their own admission, had lived frugal lives, going without a lot of things to bring up three daughters.
Retirement was planned and beckoned at age 65, but an out-of-the-blue redundancy at age 62 changed all that. A rushed downsizing, life plan and rewritten cashflow model provided reassurance retirement was going to be OK.
Costa coffee or Costa del Sol?
In their revised model, these clients had an expense item for ‘Costa coffee and lunches’: about £2,400 per annum, an expense that was part of a good model.
I suggested changing it to £4,800 per annum just to see what little extras in life they could be acquire. The result was still an acceptable model. Then, with a twinkle in her eye, Sue asked: ‘Please could you make it £500 per month or £6,000 per annum?’
I did, and the model was still acceptable. Peter and Sue sat back, reflecting on a retirement overabundant with Costa coffee and lunches.
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