For Investment Advisors
Liability Driven Investment (LDI)
for Defined Benefit Pension Plans
Managing a pension trust portfolio to achieve the actuary's assumed rate of return is usually not an optimal approach.
LDI is an investment strategy set with explicit
reference to liabilities.
The return objectives are carefully weighed
against:
- The pension plan's surplus or deficit (funded status), and
- The risk implications of various surplus or deficit levels.
We can assist you in understanding the duration of the liabilities and the risk implications of surplus and deficit for any defined benefit plan to which you provide investment advisory services.
Consumption and Spending Forecasts
For your individual Clients
Life-cycle consumption smoothing—balancing a living standard through time— is the goal we help your client achieve. Finding the right current and future spending targets to achieve this goal is a complex mathematical problem.
Using the ESPlanner software from Economic Security Planners Inc. we provide individualized reports which forecast spending, saving and insurance outlays, with the goal of raising, smoothing and protecting a standard of living.
My role in guiding you and your client through the ESPlanner process is to:
- Making sure the current financial status is accurately represented in the input assumptions
- Assisting you, if necessary, with selection of assumptions for the future
- Assist you, if necessary in presenting the spectrum of results, generated by the Monte Carlo simulation
Level Dynamics is not an investment advisor, tax advisor or a financial planner, and does not provide investment advice. Any investment advice will be delivered by you as a RIA or RIA representative.
