Page 5 - CEG Advantage - The Super Rich Stress Test - February 2018

• Calculate cost structure. The intent here is to identify the best and most cost-effective
solution possible. When calculating cost structures, all the expenses should be
specified—including long-term costs.
Based on the stress test’s evaluation of the existing or proposed solutions, alternative
products or services might be considered. It can be very useful to do side-by-side
comparisons between such alternatives and the solutions being considered or currently
used, asking questions like:

• How do the assumptions compare?

• How do the alternatives rate when it comes to achieving the individual’s or family’s goals
and objectives?

• Which solutions are more cost-effective?

The end result of the process: recommendations. Based on those recommendations, there
are five courses of action to consider taking (see Exhibit 4).

EXHIBIT 4
Courses of Action
Course of action Critical factors

Stay the course The solutions are appropriate

Choose different solutions A “system fail”

Choose a different professional The solutions are appropriate except
that the providers are not truly capable
and/or are cost-inefficient

Use a modified approach with A little tweaking is required
the original professional

Continue stress testing A different professional should
conduct the stress test

1. If the stress testing finds the solutions being used or proposed to be on target and of
high quality, the recommended action is to “stay the course.

2. If the stress testing finds what may be described as a system failure—for instance, the
financial products being used are not going to achieve the desired results and might
even blow up—the right move is to take a different course of action.

3. If the solutions are appropriate but the professionals involved are really not up to the
task of implementing them (or they charge too much money), it will usually make sense
to switch to more capable and/or cost-effective experts.

4