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Diary of a Life Planner: Costa coffee or Costa del Sol?

by Chris Mellor on Feb 26, 2013 at 11:33

Diary of a Life Planner: Costa coffee or Costa del Sol?

‘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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6 comments so far. Why not have your say?

l'ifa passeport en provenance de France

Feb 26, 2013 at 12:17

wow !! excell spreadshets

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You must be joking

Feb 26, 2013 at 13:35

@ l'ifa

Exactly and of course, the spreadsheet will have a few rather important assumptions in it, not least


Interest Rates

Investment Returns

Exchange Rates

I assume what the article meant to say was

"we have tweaked the amount you spend on that awful brown gloop pretending to be coffee and AS LONG AS ALL THE ASSUMPTIONS work out year after year after year, which is highly unlikely, you can do this..."

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l'ifa passeport en provenance de France

Feb 26, 2013 at 13:59


Used to be a great tool for selling big Mips, big commision and using fee offset .

Do costa pay the correct corparation tax ?

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Adam Grant

Feb 26, 2013 at 19:39

"Lifetime cashflow and wealth modelling,..." Is that IFA speak for Budget planner,...

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Christopher Mellor

Mar 01, 2013 at 16:14

So how do you cynics show your clients if they have enough money ? If you are serving your client correctly you will be revieiwing their model annually, actual last 12 months returns, inflation rate etc and bringing the numbers back to reality thereby reducing the assumption period year by year. I assume none of you provide such a service to your clients as you wouldn't be making such childish comments.

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You must be joking

Mar 01, 2013 at 17:52

Actually Chris

I don't think any of the comments were particularly childish, they merely highlight the huge margin for error in utilising anything that is as scientific as MATHS to demonstrate to a client how they WILL fair for life.

(Maths is a science as it always produces the same answer for the same calculation, if based on the same figures).

So, where you have so many assumptions, the margin for error, i.e. deviation from what actually happens compared to the science of the calculation, becomes greater.

Even your comment above contains one major assumption, i.e. that you can reduce the assumption period annually.

This would only be a correct statement if you KNEW the exact date your clients were going to die, and unless they've booked into some Swiss clinic or are committed to illegal euthanasia, then this isn't the case.

Unless, of course, there is a mathematical formula that calculates the amount of Costa gloop that needs to be drunk to cause organ failure and that's also part of your forecasting system?

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