The KISS principle: Keep it simple, stochastically

'Stochastic modelling is a particularly powerful tool'

clock • 5 min read

A stochastic model can answer a lot of questions for you, but as with all modelling, the answer you receive is only as valuable as the model in question, writes Steph Willcox

The world of an actuary is a strange one. We place monetary values on things that may happen in the future and then help companies and clients prepare for these uncertain events based on our professional, but subjective, outlook. Financial planning professionals of course attempt to do the same thing for individual clients, to construct a portfolio that will grow sufficiently to fund their client's objectives. Traditional deterministic models for lifetime cash flow planning are, quite rightly, falling out of favour, with the financial planning world embracing uncertainty and choosing ...

To continue reading this article...

Join Professional Adviser for free

  • Unlimited access to real-time news, industry insights and market intelligence
  • Stay ahead of the curve with spotlights on emerging trends and technologies
  • Receive breaking news stories straight to your inbox in the daily newsletters
  • Make smart business decisions with the latest developments in regulation, investing retirement and protection
  • Members-only access to the editor’s weekly Friday commentary
  • Be the first to hear about our events and awards programmes

Join

 

Already a Professional Adviser member?

Login

More on Technology

PFS Conference 2024: AI should augment not replace human element in advice

PFS Conference 2024: AI should augment not replace human element in advice

Firms that adopt technology to save time will improve client experience

Jenna Brown
clock 14 November 2024 • 2 min read
Advisers call for enhanced compliance processes to use AI

Advisers call for enhanced compliance processes to use AI

AI ‘firmly embedded’ into advice journey but ‘more work needs to be done’

Isabel Baxter
clock 12 November 2024 • 2 min read
PFS Conference 2024: 'Augmented advice' will give clients best of both worlds

PFS Conference 2024: 'Augmented advice' will give clients best of both worlds

Advisers can scale-up by embracing technology

Jenna Brown
clock 12 November 2024 • 2 min read