Financial planning is built around the future.

When can I retire? How much can I reasonably spend? Can I afford to help my children or grandchildren? What happens if I buy another home? Am I saving enough? What happens if markets don’t cooperate?

These are dynamic questions. Yet financial plans can sometimes provide surprisingly static answers.

A traditional financial plan may take a client’s current financial situation, combine it with a set of assumptions, and project those assumptions decades into the future. The resulting analysis can be incredibly valuable. It can help organize complex financial information, identify potential shortfalls, and give investors a framework for making decisions.

But a projection is still a projection.

Real life doesn’t stand still.

And neither the person making financial decisions nor the professional helping them make those decisions is completely free from bias.

Your Financial Life Is Constantly Changing

Markets change. Interest rates change. Inflation changes. Tax laws change. Income changes.

More importantly, your goals change.

Someone planning to retire at 67 may decide at 58 that continuing to work until 67 is no longer worth the tradeoff.

A family that planned to remain in its current home may suddenly begin considering a vacation property.

Parents may decide that helping their children purchase their first homes is more important than leaving a larger inheritance decades later.

Retirees may discover that they want to travel more during their first ten years of retirement and spend less later.

None of these decisions necessarily means the original financial plan was wrong.

They mean life changed.

And when life changes, the more useful question isn’t simply:

“Am I still on track?”

It is:

“What are my options now?”

Financial Decisions Aren’t Made in a Vacuum

There is another challenge that deserves more attention: bias.

Financial decisions are made by people, and people naturally rely on mental shortcuts when dealing with uncertainty.

An investor may be reluctant to change a strategy because it has worked recently. Another may react strongly to a market decline because recent losses feel more significant than long-term historical experience. Someone approaching retirement may become overly conservative because the possibility of loss suddenly feels more threatening. For others spending may increase when they experience periods of greater anxiety.

Financial professionals aren’t immune either.

Experience is valuable, but experience can also shape which solutions we consider first, which risks receive the most attention, and which assumptions feel most reasonable.

This is an integral part of human decision-making.

Behavioral finance has identified many biases that can influence financial choices, including recency bias, loss aversion, anchoring, confirmation bias, overconfidence, and status quo bias.

Consider a simple question:

“Can I retire at 62?”

One person may instinctively focus on everything that could go wrong.

Another may focus on primarily on strong recent investment returns.

Another may anchor to age 65 simply because that was the retirement age used in their original financial plan.

From Projections to Probabilities

One way financial planning can address uncertainty—and potentially reduce the influence of intuition alone—is by thinking in terms of probability rather than certainty.

Instead of assuming that investments will earn exactly the same return every year, financial planning models can examine many possible future outcomes.

Some scenarios will be favorable. Others won’t. The objective isn’t to predict exactly which future will occur. No model can reliably do that.

Instead, probabilistic planning can help investors understand how resilient their financial plan may be across a range of potential outcomes.

That creates a different conversation.

Suppose a household’s current retirement strategy has a particular estimated probability of achieving its goals. Now suppose the household wants to retire two years earlier.

The important question isn’t simply whether retiring earlier is “good” or “bad.”

The better questions are:

How does that decision affect the plan?

How much does the estimated probability of success change?

And perhaps most importantly:

What other changes could help offset that tradeoff?

Maybe the answer is working one additional year instead of two.

Maybe it is increasing savings today.

Maybe it is adjusting retirement spending.

Maybe it is changing the timing of another goal.

Instead of relying entirely on the first solution that comes to mind, financial planning technology can help systematically examine alternatives.

The Tradeoffs Matter

Most financial decisions don’t happen independently.

Choosing to spend more money on one goal usually means that money isn’t available for another.

Retiring earlier may create more time, but it may also mean fewer years of saving and more years of portfolio withdrawals.

Leaving a larger legacy may require reducing spending during retirement.

Purchasing a second home may affect retirement timing, investment contributions, taxes, liquidity, and estate planning.

There isn’t always necessarily a single mathematically “correct” answer.

The right decision depends on what matters most to the individual or family making it.

Technology Doesn’t Automatically Eliminate Bias

Using technology does not automatically make financial planning unbiased.

Models are created by people. Assumptions are selected by people. Data can contain limitations. Algorithms can reflect the choices made by their designers.

Technology can introduce its own forms of bias if those limitations aren’t recognized. The objective therfore shouldn’t be to replace “biased humans” with “unbiased algorithms.”

A better objective is to use technology to create a more systematic, transparent, and repeatable decision-making process.

If the same financial question can be evaluated using consistent assumptions and multiple alternatives can be compared using the same analytical framework, investors and advisors have another reference point against which to test their intuition.

The model doesn’t make the decision.

It helps inform the decision.

What If Your Financial Plan Could Explore the Alternatives?

Imagine asking:

“What happens if I retire at 62 instead of 65?”

Instead of receiving a simple yes-or-no answer, you could explore how that decision affects the probability of achieving your other financial goals.

Then you could ask another question.

“What if I reduce retirement spending by $10,000 per year?”

Or:

“What if I save more for the next five years?”

Or:

“What if I delay buying the second home?”

Each decision changes the financial picture.

And examining those alternatives systematically can help challenge assumptions that might otherwise go unquestioned.

The purpose isn’t to predict the future perfectly.

It is to better understand the range of possible futures available to you.

Building a More Dynamic Financial Planning Experience

This is one of the ideas behind Pythia.

Pythia is a financial planning and predictive analytics platform being developed by Coroebus Wealth Management to help connect financial decisions with goals and their estimated probability of success.

The goal is not to replace the financial planning process—or the judgment of a financial professional—with an algorithm.

It is to provide another analytical perspective.

Pythia is being designed to help users define goals, explore alternatives and better understand how changing one decision can affect the rest of their financial plan.

By evaluating alternatives through a consistent analytical framework, technology can also help investors and financial professionals recognize when assumptions, habits, or biases may be influencing the conversation.

Because a financial plan shouldn’t exist only as a document you review periodically. It should be a framework for asking better questions.

What may ultimately be one of the most valuable uses of predictive analytics in financial planning is not attempting to predict one inevitable future and not attempting to remove people from the process, but helping people evaluate more possibilities with greater consistency and accuracy.

Because the question isn’t simply:

“Where will my current plan take me?”

A more powerful question may be:

“What could I change—and what happens if I do?”

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Pythia is a financial planning and predictive analytics service of Coroebus Wealth Management, LLC, a New Jersey registered investment adviser. Financial planning projections, simulations, predictive analytics, and probability estimates are hypothetical, depend on assumptions, methodology, and information provided, and are not guarantees of future results. Technology and analytical models have limitations and should not be considered a substitute for professional judgment. Investing involves risk, including the possible loss of principal.