investment-key

Each week, we look at the ABCs of cash flow management.

Y is for Yield

The term yield has several meanings, including the return on investments.

Read: When high yields are too good to be true

In a less literal sense, advisors can also look at the total yield of their financial advice. To do this, they can measure the value clients get out of working with them and out of extra services, such as tax and cash flow planning. Along with asking people about their satisfaction levels, advisors can consider how many referrals they’re getting and whether their reputations are growing.

Read: 6 ways to improve your services

There are three ways to show clients the value, or yield, of your advice through cash flow management. You can:

  1. Reduce interest costs. By unifying debts and reducing amortizations, you can help clients increase their monthly cash flows and, when that money’s directed properly, their overall net worth. For instance, people can use freed-up funds to invest and boost savings.
  2. Reduce mindless spending. When you provide clients with cash flow plans that help them manage uncontrolled spending, they’ll be able to reach goals that are truly important to them. Read: Prioritize spending in drawdown calculations
  3. Manage taxes efficiently. To take advantage of tax-planning opportunities, clients may need more cash on hand. If a client wants to contribute more to his RRSP, for example, a cash flow and debt management plan could help him achieve his savings target. Read: Do fees or taxes impact portfolios more?

Next time you hear the word yield, try thinking of the term in a much broader context. By providing services such as cash flow planning, you’ll show clients you’re offering more than portfolio returns. It’s key to also help people maximize their income potential and grow their wealth.

Come back next week for letter Z.

Also check out:

4 obstacles to high-yield returns

How to create a yield cushion

How to preserve clients’ nest eggs

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Stephanie Holmes-Winton is a Halifax based financial services educator/speaker who helps advisors find the money to help their clients fund their financial plans. She is the author of Defusing The Debt Bomb & $pent. Stephanie is also the founder and board chair of the Certified Cash Flow Specialist™ designation program. You can reach Stephanie at sholmes@themoneyfinder.ca or themoneyfinder.ca
Originally published on Advisor.ca

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