The creators of the most advanced program to calculate optimal investment and consumption strategies for retirees are to make a public demonstration of their work in Melbourne on June 1.
David Schneider, head of research at UniSuper, plus Paul Newfield and Jeffrey Chee, both senior actuaries at Towers Watson, will speak at an Actuaries Institute briefing held at the KPMG building, 147 Collins Street from 12-2pm.
This will be the second public demonstration of their Complex Adaptive Retirement Strategy software, which was unveiled to strong positive feedback at the Conexus Financial, Fiduciary Investors Symposium at Lilianfels, Blue Mountains a week ago.
Chee, Newfield and Schneider are interested in feedback or criticism of their formulas and assumptions from attendees, so they can improve their findings.
The program makes more calculations, and offers individuals a larger number of permutations, than any other retirement model. In total, it factors in 1,000 stochastic demographic simulations, over 1,000 potential retirement portfolios and 44 asset classes multiplied across 2,000 investment simulations over 50 years. The model also factors in personal risk preferences, as well as spending and inheritance aspirations.
The idea is to provide a range of tailored investment solutions for individuals on how they could invest and drawdown their retirement income, so as to facilitate more informed financial advice.
Each suggested portfolio created by the model comes with the likelihood, expressed as a percentage, of meeting investment and spending plans and the most likely date of the ruin year.
David Bell, chief investment officer of Auscoal, who introduced David Schneider and Paul Newfield’s presentation at the Fiduciary Investors Symposium, was enthusiastic of the work carried out so far.
He suggested the program could be used to calculate and score the outcome of different pension products and the percentage likelihood of each in meeting its purpose.
“Out of all the models I have seen, I haven’t seen better,” he said. “It is so important to have an engine like this at the heart of your business.”
At the Fiduciary Investors Symposium, Schneider and Newfield emphasised that one of the aims of the software was to help individuals understand how their spending patterns in retirement would fluctuate and how their investments needed to reflect this. They recommend retirees getting quarterly updates of their spending capacity through the model.
The talk in Melbourne is free and open to all. Register here http://www.actuaries.asn.au/events/calendar?id=1034