The Currence App is going to be a game changer for clients and advisors alike. Not only does the app teach people how to save first using a financial “reservoir,” it positions advisors as the go-to when a client has reached their target. That means they’ll look to you to help them make money moves and create even greater protection, liquidity, and cash flow. 

How Does Currence Work as the Client?

When a client enrolls in Currence, they are prompted to establish a new, secure, and interest-bearing bank account. Then, they adjust their finances so that all money flowing in gets deposited into this “reservoir.” 

Then, the client works with the strategist who enrolled them to determine how much of that money will be pulled from the reservoir each month. This sum represents all monthly expenses, and can be any number. This money flows into the client’s existing banks accounts that they normally use to pay all their bills and make purchases. 

Effectively, the reservoir captures savings FIRST. Then, it filters whatever is left into the client’s checking account to be used as normal. For all intents and purposes, the client gets the psychological benefits of saving and watching the reservoir grow, while still getting a “paycheck” to their checking account to be used how they wish. 

This simple act of capturing savings first allows clients to change their paradigm completely. 

Setting a Target

Currence also allows the client to set a target for their reservoir. Until the target is reached, the client is encouraged to simply allow the reservoir to accumulate without withdrawing. Then, once that target is hit, the client can use the excess to invest or create more cash flow. This is where the advisor comes in. 

How Does Currence Work for the Advisor?

When you enroll in Currence as an advisor, you unlock the ability to enroll unlimited clients in Currence under your account. When clients enroll using your personal link, you can see their progress through the client portal. This helps you track their progress and work with them to set new Targets, adjust the reservoir flow, and much more. 

On top of this, once the client reaches their target, the app prompts them to reach out to their specialist (you), to help them use the excess. You’ll have all the data in your hands to help them determine what some good options may be. 

While you can see what’s happening, all decisions and control are completely up to the client. You have no power over their accounts, or what they do, which means the client can be confident that they’re in control, and you aren’t taking any assets under management. 

Proving Currence Works in Maximum Potential

As a fun exercise, let’s look at how Currence could work in someone’s life by using the Maximum Potential calculator. 

To lay the groundwork, we’ll plug in information for a 35-year-old client with an income of $125,000 and no assets. Over a 35-year timeframe, you see that there’s a cumulative $4.375 million moving through this client’s hands. 

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However, this assumes that the client never gets a raise or otherwise increases his income. If you input just a moderate 4% cost of living increase (no raise), the cumulative sum surpasses $9.2 million. That’s more than double the original sum.

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Let’s assume that your client could save all of that money at 4% and never have to spend a single penny of it. The maximum potential of the client’s income is now a compounded $17.2 million. That’s the full capability of the client’s income if they saved everything.

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This is just proof that earning an income and saving as much as possible is the single most important thing your client can do on their wealth journey. 

Factors That Erode Wealth

Yet what happens to the income once taxes, expenses, and inflation have their say? At a 35% tax rate, your client is looking at a significant loss. While the cumulative tax cost is only about $3.2 million, it isn’t removed at the end. It’s taken out along the way. This means that there’s a compounding effect on the loss, thanks to the tax. So while your client has technically only paid $3.2 million, it’s cost them $6 million that they would have otherwise accumulated. 

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If you add debt and lifestyle expenses, you’ve got an above-average saver at 10% of income, and yet the money that is leftover has been significantly reduced. These costs all along the way make your potential just disappear. If that doesn’t convince you (or your clients) of the power of opportunity cost, I don’t know what will. 

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The Macro View

If you use the MACRO button in Maximum Potential, you’ll actually be able to see how the money leftover at the end of this illustration distributes. In other words, if this client were using his savings for a typical retirement, starting at age 70, with the money he saved, the Macro view shows how long that money will last. 

As you can see below, it lasts about 6 years based on the client’s current expenses. Note: the lefthand side shows expenses, and the righthand side shows the account balance.

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Improving the Picture

So, does this mean your client is doomed by this information? No! Let’s look at some practical steps that you could help your client move through to improve these numbers. 

For starters, what if we helped the client to stop increasing their debt at the same rate as inflation? If you slash that rate from 4% to 2%, that action alone takes the client’s income longevity from just over 6 years to 14 years of income. 

(Note: An easy way to tell how many years of distribution the client has at their current expenses is to hover over the green compound number on the righthand with your mouse.)

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Next, let’s look at lifestyle. First, we can consider that not all lifestyle expenses are created equal. Some, for example, are going to increase with inflation over time that we have no control over. That’s expenses like groceries, the water bill, etc. Then, there are expenses we can control, like eating at restaurants, going on vacation, etc. 

To illustrate this, let’s split them. Let’s say that half (15%) of the client’s expenses are fixed with inflation, and the other half are discretionary. We’ll put the latter in the “Other Costs” column. The fixed expenses will be impacted by inflation, while the discretionary expenses are just that–discretionary. Let’s say the client does increase those expenses each year, but not quite at the same 4% rate that their income is increasing. By cutting that rate to 2%, the client has now increased their distribution income to about 23 years worth of income. 

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Finally, let’s consider what the client could do if they worked with some good CPAs who could reduce their tax bill to 31.5% from 35% Now the client is at 27 years of distribution income. 

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To top it all off, what if the client was able to get a 5% return instead of a 4% return? If so, they would now have essentially 40 years of distribution income. 

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The Currence Piece

Realistically, these small changes have only changed the client’s overall savings rate from 10% of his income to 13.5 %. That’s not a drastic change, all things considered, and it only takes a few adjustments. 

The Currence app has helped people save an average of 38% of their income by helping them to adjust their habits. And they can do this all relatively painlessly (in fact, it even becomes something of a dopamine hit) using the app. It takes some time, but it truly helps clients to require their thinking about savings.

So if going from a 10% savings rate to a 13.5% savings rate can add over 20 years to a client’s distribution income, imagine what’s possible if they could save 38 percent? And even if they land somewhere between, they’re going to notice substantial changes in their lives. The Currence app is going to support your clients as they create this discipline, leaving them better off than if they tried to do it alone. 

Typical Financial Advice

The problem with typical financial advisors is that they’re encouraging their clients to chase a rate of return. They care less about the amount of savings and more about that earnings percentage. This, unfortunately, is misplaced. 

The problem is that it encourages clients to be lackadaisical in their savings, and expects the account to manage itself. The problem is that these high-ROR accounts can carry a lot of risks, which means potential losses. On top of that, there are taxes, management fees, and other costs that further erode this wealth.

And the bottom line is, you could have a 100% rate of return, yet if you’re not putting any money in that account, it’s still going to be zero. With consistency and discipline, your ROR is far less important because you’re feeding the account. 

Access to Currence

The Currence app will be available nationwide soon, so you can use it to help your clients save first. You can get access to Currence on your own, or through a Prosperity Economics Advisors membership (at an exclusive discounted rate). And if you have some clients who are curious about why savings is critical, feel free to walk them through the demonstration above to share how savings saves lives. 

To learn more about Truth Concepts and how to convey financial concepts to clients, we invite you to attend a 3-day Truth Training event. You’ll learn the ropes for every calculator, and get valuable networking time with other industry professionals.