Monty Simulation is our flagship product. Monty Simulation incorporates volatility in the return calculations addressing the unrealistic assumption of applying the same return every year (linear projection) to show the expected outcome. This sets the client expectation in more realistic assumptions.
It introduces reasonable expectations around uncertainty and volatility and being able to get a sense of long-term outcomes in both good and bad market conditions. Takes long term investment planning closer to the real world of investment markets.
Monty Simulation also enables the advisor to change certain inputs i.e., contribution rate, withdrawal rate, escalation rate, term and show the investor the future consequences of decisions taken today. It clearly illustrates important trade-offs and identifies ‘levers’ that have a material impact on the outcome.
The Monty Simulation engine consists of:
- Historical and Monte Carlo Analysis
- Compare Linear Whale Chart to Monte Carlo Output
- Multi-product Drift Analysis
- Longevity Analysis
- Bulk simulation upload – i.e., run simulation of whole EB client book (estimated end October 2021 completion)
Another important point is that Monty Simulation focuses on the key long term return driver, asset allocation. It enables the advisor to clearly see the current look through asset allocation. The adviser usually has no idea about as he focuses only on funds and so ends up just focusing short term relative performance.