In order to be able to provide for and manage both short and long term financial security, a portfolio needs to be constructed around planned lifetime financial needs. 

This demands three key things.

• The ability to model the investor’s net financial needs (all income and capital expenditure less all income and capital received) over time.

• The ability to construct a portfolio directly around these needs and to model the interaction of portfolio structure and needs over time.  This requires investment planning and modelling expertise.

• To protect the ability of assets to meet financial needs irrespective of significant stock market and economic risks.

Simply forecasting asset returns and then deducting needs from the forecast future capital does not manage risk nor does it structure portfolios to meet needs irrespective of risk.  This is a simple or naive solution.

The menu at the side provides basic information on important aspects of asset and liability modelling and management for the individual. 

For further information please see the asset management expertise required by your wealth managers to deliver total asset life cycle wealth management and for those who want a more in depth assessment please see the technical perspectives in the news and technical sections.

Make no mistake, this issue is not frivolous in nature.