Benjamin Felix

Viscosity solutions in financial planning is not something that I would have

Oh, yeah, it makes sense.

Once you've explained it all.

If someone told me that we were going to be talking about viscosity in a financial planning conversation, I was like, what are you talking about?

The discount rate for estate planning will be one thing now, like when you're sitting here recording a podcast is one thing.

But if you have a near-death experience or if a spouse dies or if you get some kind of diagnosis, the discount rate on that could change.

Is that kind of what you mean?

The reality is that can change over time.

And so when you're building an optimization, like, okay, how do we build an optimal financial plan?

What does that look like?

You have to account for the stochastic nature of that variable.

Should financial planners be influencing those discount rates?

to re-anchor listeners.

We're talking about how important the different financial planning domains are to someone who is making financial decisions today.

And someone who's very far away from retirement might not think that retirement is very important to think about, but we're saying that the financial planner in that situation should maybe be talking to them about why they are going to care about that one day, which should influence how much they care about it today.

Because with compounding and stuff, you can't solve for it later the same way you can solve for it now.

Super interesting to think about.

Can you describe the four-tier architecture that summarizes your model?

I love that point about we don't do specific simulations like what you're talking about, like event simulations, but we do basic Monte Carlo type stuff.

And it's such a powerful thing to be able to say to a client when the market's down 10% or whatever, to be able to say, well, we factored this type of outcome into your financial plan and it's still good.