A financial planning tools provider has written to the Financial Conduct Authority (FCA) requesting it look into the appropriateness of stochastic models currently used by advisers amid concerns over their quality.
eValue strategy director Bruce Moss (pictured), whose firm provides stochastic modelling software, warned that advisers are not able to perform proper due diligence on the tools and run the risk of forming false conclusions based on the "considerable danger of product bias" in some. Stochastic modelling is used by advisers to forecast retirement income and can form the basis on which retirement products are chosen. Advisers have access to two types of model - mean, variance co-variance model (MVC) and economic scenario generator (ESG) - but only one is suitable for long-term forecasti...
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