Page 4 - CEG Advantage - The Super Rich Stress Test - February 2018
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Running a reliable stress test
To be effective and informative, stress testing should be done in a systematic manner. While
there are some variations, the basic process starts by determining the individual’s or family’s
goals and objectives (see Exhibit 3). The goals being sought, the problems to be solved and
the opportunities to benefit from should be the driving forces behind the choice of financial
and legal solutions.
EXHIBIT 3
The Stress Testing Process
Determine your goals
Evaluate existing or proposed
services and products
Work the Evaluate alignment Calculate cost
assumptions with goals structure
Address alternative services
and products
Recommend course of action
Once the goals and objectives are clearly understood, the specific existing or proposed
financial services or products can be evaluated. There are numerous ways to dissect and
critically assess financial services and products:
• Work the assumptions. A plethora of assumptions underlie all services and products—
and it’s common for professionals to use somewhat Pollyanna-based assumptions
when trying to sell their solutions. In stress testing, these assumptions are modified to
determine how the solutions will work when a given scenario changes.
• Evaluate alignment with goals and objectives. A solution might prove to work extremely
well, but still not achieve the desired results. It’s essential to ensure that the services and
products will accomplish the individual’s (or family’s) goals and objectives.
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