Interactive Efficient Frontier Monte Carlo Wealth Graph Portfolio Comparison Morningstar ® Principia ® Asset Allocation Efficient Frontier Features Include 3 Interactive graph 3 Editable market assumptions 3 Editable constraints 3 Custom Asset Classes Monte Carlo Variables Include 3 Ongoing savings rate 3 Social Security 3 Retirement needs 3 Inflation 3 Tax rates Principia Asset Allocation module can help you build better portfolios. Portfolios that give your clients the best chance of achieving the highest return for a given level of risk. And Asset Allocation doesn’t give “cookie cutter” results—its analysis includes factors such as inflation, taxes, and ongoing savings to ensure that your clients’ long-term needs and objectives will be met. Import Portfolios and Determine Risk Tolerance Import portfolios directly from Principia’s portfolio mode into Asset Allocation to survey a client’s current situation. Then quickly assess the client’s risk tolerance using Morningstar’s risk questionnaire. Generate an Efficient Frontier Graph With a clear picture of a client’s current holdings and risk tolerance, you can generate an efficient frontier graph. It’s based on 13 separate asset classes—including commodities and REITs—and helps you determine the optimal portfolio for any given risk level. You can create efficient frontier graphs using the default Ibbotson assumptions for pre-tax returns, standard devia- tion, and correlation between each asset class, or you can incorporate your assumptions. You also have the option of including your own custom asset classes Compare Current and Target Portfolios Once you’ve selected the asset mix that’s most appro- priate for your client’s needs, create a detailed comparison of the current portfolio versus the new target portfolio. Run a Monte Carlo Simulation Test an allocation with advanced Monte Carlo capa- bilities that allow you to run sophisticated simulations that forecast expected wealth, based on a client’s specific cash flows, tax burden, and time horizon. Perform wealth analysis for different scenarios and refine the plan by altering factors such as inflation, taxes, ongoing savings, and retirement needs to meet a client’s wealth goals. ©2007. Morningstar Research Inc. All rights reserved. Morningstar and the Morningstar logo are either trademarks or service marks of Morningstar, Inc.