Benjamin Felix

It's worth mentioning, you touched on this briefly because people might be thinking, why did you guys expend all of this effort if it doesn't actually change things that much?

One of the big reasons, and we haven't really gotten there yet, but we're moving in that direction.

This was a first step.

One of the big reasons that we care about those higher moments of the distribution and the shape of the distribution is for other asset classes.

So for us to model venture capital, for example, using a mean and a standard deviation and a correlation is just not sufficient to capture the expected effect of that asset class at the portfolio level.

Likewise for other sort of alternative asset classes.

So that's something we've struggled for a long time because even though they're not things that we recommend, we do have high net worth clients who have allocations to those for whatever reason.

Maybe they were recommended by a previous advisor and maybe they were done as a passion project or whatever, or maybe they just wanted exposure to that asset class.

And modeling that in a financial plan has been a thorn in our sides for a long time.

Using this type of simulation method is going to be a huge improvement when we get to those asset classes.

I thought it was worth mentioning because we're not seeing huge changes to small changes.

We're not seeing huge changes to the simulation results based on this better methodology, but for other asset classes, it'll matter a lot more than for standard stock and bond portfolios.

Yeah, it's interesting.

That's like Japan leading up to 1990.

You did have a crazy right tail event where they were just incredible, incredible returns, bam, bam, bam.

But then you've got a CAPE ratio at 90 or whatever it was and returns don't last forever.

Right tail returns don't last forever in real life.

But it is interesting how it changes the mean because that right tail in the Gaussian distribution with random returns is totally uncapped, but the left tail is implicitly capped because financial plans stop, like failure happens when the assets run out and you don't get a big negative number.

People never believe, man.

I haven't been in client meetings like this for a while now, but I know advisors still have this issue.