Greg Davies: Three ways stochastic tools are less use than you think

Cashflow modelling has long been at the core of financial planning. It is where diagnosis of the past and predictions of the future come together to prescribe actions for the present. In effect, it is an attempt to solve a puzzle - how should you account for long-term uncertainty in your short-term actions? A scattering of puzzle-solving approaches has evolved, though each boils down to a cost-benefit analysis of a lifetime of ins and outs: of income, inheritances, goals, and gifts; and appropriately weighting the likelihood and influence of each. Evolution repurposes existing feature...