Personal financial modeling is the process by which we will construct a financial representation of some, or all, aspects of the client’s current financial condition.  This includes cash flow analyses, net worth projections, survivor needs, as well as an in depth portfolio analysis.  The process may also summarize particular events for the client and provide direction regarding possible actions or alternatives.  For example, for a client that requires retirement income we will use Monte Carlo Simulations in order to ascertain the probability of achieving the desired income relative to the portfolio allocation.  The numerous iterations that are run during these simulations will help us see the most practical withdrawal rate for the given amount of time.

Utilizing various research providers such as Ibbotson and Associates/Morningstar, PSN Informa and Zephyr we will delve into the current portfolio and compare the portfolio with the risk/return profile of the client.  SRCM will model portfolios to fit on the efficient frontier as defined by Modern Portfolio Theory.  The efficient frontier is a curve that plots optimal portfolios that have the highest expected return possible for the given amount of risk.  All portfolios will plot on the line based on the individual client’s risk/return profile.