Purpose of this Site
We propose a reliable, auditable Method, BI-SEM, for Financial Advisors to determine the current value of a Client’s Deferred Annuity, to meet the Advisor's "Best Interest" and "Due Diligence" needs.
We invite comment and debate on the Method's Goals, Principles, and Steps.
Our goal is to facilitate Financial Advisors’ Best Interest Requirements by defining a General, Principles-Based Method for evaluating any Deferred Annuity.
It is hoped that this Generalized Method will garner widespread recognition and adoption by software developers who provide portfolio-oriented apps to Financial Advisors.
No reliable, auditable generalized method currently exists for Financial Advisors to determine the current value of a Client’s Deferred Annuity. However, one is urgently needed for their Best Interest and Due Diligence requirements.
On this website, we propose such a method. We encourage discussion about its efficacy and hope that this will eventually lead to a more meaningful and effective version that will gain general acceptance and adoption.
The proposed Generalized Method leverages important work already done by the American Academy of Actuaries and the NAIC for Insurance Industry Principles-Based Reserves (PBR) but from the policyholder/investor POV.
We have named the prototype Evaluation Method “Best Interest - Simulated Evaluation Method”, or BI-SEM. It requires a Stochastic Model that generates multiple economic Scenarios. Frequency Distributions are created for Key metrics calculated for each Scenario, based on projected net cash flows generated by the individual portfolio component.
The method also requires that calculations be based on a Client’s personal attributes and goals. Because it produces Frequency Distributions, various Percentile Values can also be evaluated.