Braden Warwick

In the Gaussian model, you see these really high wealth values that bring up the mean quite a bit.

Regardless, the financial decision should be made using the median outcome.

That's how you should be thinking about the expected outcome is in terms of the median.

But I'm not sure if that's universally true among financial planners or retail investors that are doing this type of analysis.

So I think that's an important distinction to make is the difference between a median and a mean outcome.

The median outcome improved using our new model like we'd expect because it has this mean reversion and sequence of return modeling captured more accurately.

The mean decreased.

That's right.

What I thought was really interesting about that is through our conversation with John and our work with John, we spent so much time looking at these left tail events and how to improve the left tail of the distribution.

But in terms of the impact of the financial planning distributions, it's actually that upper tail that's impacted the most because it really is pulling these runaway events back down to earth.

I thought that was pretty interesting.

And the results are pretty meaningful too.

We're seeing that the median is improving by, on average, about a half million dollars in final net worth.

And the mean is decreasing by a million dollars in final net worth.

So these are definitely meaningful numbers that would impact the financial advice, especially for someone who has those types of goals, like estate goals or multi-generational wealth type goals.

Yeah, exactly.

Like you alluded to, Ben, if we're able to model this with alternative asset classes, I think that's been the biggest challenge that we've seen so far is that when we have our concentrated stock portfolios in conquest and we're trying to answer that question, should I invest in this something that we would think of as like some sort of crazy investment where it's a concentrated portfolio or some sort of bet?

It's difficult to show that in Conquest because Conquest will display the distribution of planning outcomes and there's so many runaway events.

Obviously, we don't publish this data, but I'm sure our audience can imagine that the standard deviation on these concentrated portfolios would be substantially higher than a broadly diversified portfolio that we would recommend.

So you see these extreme runaway events where there's 60, 70% returns and the upper bound just goes crazy.