Benjamin Felix

And I think this person really filled in a lot of the gaps about why someone might choose specifically the AUM model, even when they know that the fee-only financial planning model is available.

And it's really that just delegation, peace of mind,

stuff that's kind of hard to measure combined with all of the expertise and financial planning and portfolio management services.

Okay.

So in the main content here, hopefully people found that interesting and didn't come across as a sales pitch or something, but I thought it was worth sharing.

So I'm going to just talk a little bit about PWL's methodology for expected returns for like estimating moments of the expected return distribution.

And then Brayden, you're going to talk more about a whole bunch of super nerdy stuff, including how we do our simulations now to generate those distributions.

At a high level, PWL combines what we call a market-based expected return, which is an expected return that is implied by market prices.

So for stocks, we use the inverse of the Shiller-Cape ratio.

For bonds, we use the bond yield.

That's one piece, the market-based expected return.

And then we use what we call the equilibrium cost of capital, which is the very long-term return for that asset class.

And for that, we use the Dimson-Mars-Daunton data that goes back to 1900.

And then we combine them in different ways, depending on the asset class.

For equities, we use 75% historical and 25% market-based expected return.

So that's 75% world equity return from the Demis Damar Stanton data.

We do adjust that for valuation changes.

So if equity returns have been high recently because valuations have increased a lot, or if valuations have increased a lot and that's contributed to recent stock returns, we do adjust for that in that long-term measure.

And I mean, likewise, if stock valuations plummeted all of a sudden and the historical return dropped, we would adjust for that valuation change.

And then we combine that with 25% market-based expected return, which as I mentioned is the inverse of the Shiller CAPE.