What actions can result from an asset liability modeling study?
This can best be answered by first recapping what an asset liability study will provide a plan sponsor. Our asset liability modeling studies do not focus on an isolated portion of the portfolio and are not isolated to a specific risk factor (such as interest rate risk). Asset liability analysis enables the development of comprehensive solutions from the top down, where the first step of our approach is to work with the plan sponsor to determine how much risk should be taken in the plan. Throughout our process, we define risk in an asset liability context and we focus on the risk metrics that are most meaningful to the client’s organization. In general, we find funded status volatility and liability tracking error (LTE) to be the most important high-level metrics. Funded status volatility and LTE are indicators of other risk measures, such as cash contributions, pension expense, and balance sheet asset and liability. We believe the circumstances specific to the financial strength of bot
