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

FCA to support firms to overcome challenges in implementing AI

FCA to support firms to overcome challenges in implementing AI

Regulator launches an ‘AI Lab’

Isabel Baxter
clock 17 October 2024 • 3 min read
Scenario planning: Lessons from the CrowdStrike outage

Scenario planning: Lessons from the CrowdStrike outage

How can we prepare for potential similar outages in the future?

Ollie Dent
clock 07 October 2024 • 4 min read
Real-time evaluation: Let AI be your portfolio's personal trainer

Real-time evaluation: Let AI be your portfolio's personal trainer

Technology is transforming the landscape of portfolio management

Tony WIlkinson
clock 03 October 2024 • 3 min read