Braden Warwick

So it's very difficult to present that to a client and actually make the case not to do it because it's human nature to look at that upper bound and see like, oh, I'm missing out on all of this potential growth.

But meanwhile, like we know that that is statistically almost impossible for that to happen.

because the distribution of a concentrated portfolio or individual stock is definitely not Gaussian.

And the DMS portfolios are a lot closer to the Gaussian distribution than these other portfolios of single stocks or concentrated portfolios would be.

And then there's also that mean reversion dynamic that wouldn't be captured either.

So the runaways become even crazier with that level of standard deviation.

So we've always found it really difficult to actually show that in Conquest.

So that's why I'm really excited to see what the next version of this project will look like in terms of getting those other asset classes fitted with this model so that we can make a realistic, informed case for clients to look at that scenario through the appropriate lens.

Totally.

And I'd really love to be able to show

a visual of the expected outcome down to completely eliminate those higher bounds, because it's really not practical for planning purposes.

If we were able to show clients what the expected outcome is, and obviously our audience would know that those other forms of risk are uncompensated risk, so we wouldn't expect the expected outcome to improve in that scenario, but we would expect those downside events to increase and overall the financial plan to look worse.

If we're able to just show that, then it would be painfully obvious that this is not the right move.

But just including those upper tail events makes that conversation really difficult because it's human nature to be drawn to that higher potential for growth.

So practical takeaways, again, it comes back to goals.

So if the client's goals are focused mostly on spending or almost entirely on spending, then it probably won't change the advice necessarily.

And I think that's good.

It makes that transition smoother for us.

We're not completely overhauling a client's financial plan.

So from a change management perspective, it makes life easier.