For Betty, the problem is education. The Grid Method s conservative strategy will disappoint. He ll need to reevaluate his needs and his risk tolerance. All three seniors need both customized, realistic projections and tender loving consideration of their individual situations. Risk tolerance is important, but good advice includes risk education of the client, not just measurement of client risk tolerance.
Static projections mislead badly.
Life and investments are not certain. Hiding uncertainty denies reality. Explaining the consequences of uncertainty in an understandable way is challenging but worthwhile. Probability of Failure is an excellent, simple measure of investment effectiveness, but needs tempering by looking at how big the shortfalls are likely to be. G. Thomas Mitchell is president of Aurora Consulting Inc., a St. Louis, Mo., actuarial and consulting firm.