How does it work?
Given the date of birth and the current income of the user, we predict the salary trajectory from an assumed age of entering into the workforce until retirement. We then use the estimated salary trajectory, apply the Swedish tax regime, account for the structure of the Swedish Pension System, and make several assumptions about the occupational pension to determine the user's current pension capital. After that, we calculate all necessary future cash flows to arrive at the suggested pension contributions until retirement.
Goal-based Financial Coaching
If the user provides an additional input, such as the desired pension age as well as the desired monthly pension income, OutRank approximates the monthly savings required to reach this income in the 50th percentile case. So far, we assume the user invests the new private savings to funds with medium risk exposure. At this stage, it is also possible to specify the exact pension capital the user has within the Swedish Pension System buckets to personalise the financial advice even further.
Smart Risk Profiling
We prompt the user to answer several questions about their reaction to the potential investment situations to determine their risk tolerance. While doing so, we control for the consistency of the answers and the nature of the questions to add an extra layer of assurance that the resulting risk profile is accurate. Then, OutRank combines the information on the risk profile with an approximation of the capacity for loss (computed by relating the salary to monthly expenses) and calibrates the consumers' utility function used to derive the advice.
Investment Product Ranking In a Matter of Seconds
Once the utility function is calibrated, OutRank compares the simulated performance of the selected group of mutual funds that are targets for the new private pension savings. Finally, it returns the investment option that maximises the utility of the customer, given the desired pension goals, the information contained in the scenario model calibration and the risk profile of the user.