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

Technology 'imperative' in the great wealth transfer pivot

Technology 'imperative' in the great wealth transfer pivot

‘It will help advisers become ready’

Isabel Baxter
clock 27 January 2025 • 4 min read
What to expect from AI in financial advice in 2025

What to expect from AI in financial advice in 2025

AI has already taken root in many of our daily lives

Nick Eatock
clock 16 January 2025 • 4 min read
Majority of IFAs have no plans to use AI in their practices

Majority of IFAs have no plans to use AI in their practices

Advisers divided on the pros and cons of AI

Isabel Baxter
clock 14 January 2025 • 2 min read