How do I think about Capital Sufficiency Analysis R28 Section 4.1 vs. Core Capital R30 Section 3? Is Capital Sufficiency Analysis merely the process (action) of wealth managers determining if a client has sufficient capital to meet financial objective (i.e. maintaining lifestyle through retirement), while Core Capital is the amount of capital needed to meet these financial objectives (amount)?
R28 Section 4.1 lists only 2 methods of determining capital sufficiency: Deterministic Forecasting and Monte Carlo, but it doesn’t talk about estimating Core Capital using Mortality Tables R30 Sect 3.1. R28 touches on Mortality Tables, but in the context of Analyzing Retirement Goals (Sect 4.2.2) in Retirement Planning.
Is Capital Sufficiency analysis used to determine if there is sufficient capital / core capital through deterministic forecasting, Monte Carlo, Annuities (4.2.2.2) and Mortality Probabilities? Just trying to connect the dots and appreciate the help!
The way I look at it, at least:
Core capital is, generally speaking, the amount of assets one needs in their portfolio to cover future expected spending needs or goals. The money above one’s spending needs/goals in retirement is one’s excess capital. This excess capital is the money you can be more creative with because it shouldn’t affect your ability to support yourself in retirement.
Capital sufficiency analysis is the process by which a wealth manager or someone similar determines whether their client has sufficient overall resources or is likely to accumulate sufficient resources to meet their stated objectives across any range of scenarios/things (which can include, but not be limited to, things such as early retirement, charitable donations, family gifts, investments into new businesses, etc). It assigns a percentage likelihood of meeting different goal outcomes and thereby allows folks to understand their prospects more clearly… then they can either adjust their investment plan or re-prioritize their goals if need be. It looks at all things, including both core capital and excess capital.
Thank you! I appreciate the thoughts. I see you are a frequent contributor. As a Level III candidate, I always appreciate your responses to various questions.
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Cheers! You got this! Thanks and good luck on your exam. If you ever have questions I am happy to try to answer them if I can 
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