In its news release, RetirementSmarts.com said that New Frontier Advisors President Richard Michaud has two patents for his technique.
The process begins with an analysis of how the performance of each of the plan investment accounts have related to one another as markets have gone up and down. Next, the model performs hundreds of simulations of potential future outcomes for each asset. These outcomes are then averaged together. According to the release, the result is a smooth curve of discreet combinations of risk and return that are matched to employee preferences.
RetirementSmarts.com is a tool through which retirement plan participants are able to combine the investment options offered by the plan to create a portfolio that produces the highest return for the degree of risk specified by the employee. Participants only have to answer basic questions about their goals. Employees can opt to have their portfolios automatically rebalanced.
A recent study showed proper asset allocation, along with rebalancing, produces more favorable returns (See Asset Allocation: The Key to Better Returns ). More information can be found at http://retirementsmarts.com .