The Objective Difference

For almost 20 years, Objective Advisors has offered the credit union industry a cost-effective solution for managing the ALM modeling process. In addition to providing our clients with reports that satisfy their regulatory requirements, we also take great pride in the accuracy of our forecasting capabilities. To accomplish this, there are many parts of the ALM process that we do differently than other ALM providers.

Here are a few of the modeling components that we do differently:

  • Dynamic vs. Static Forecasting
    Regulatory reporting focuses only on the current structure of the balance sheet, whereas dynamic forecasting focuses on both the current and the future structure of the balance sheet. As such, it requires additional assumptions be made regarding the future growth and pricing of the balance sheet. We incorporate management's expectations regarding the future growth of the balance sheet, which results in a forecast that can then be used by the management team and the Board to make more informed decisions.

  • Customized Chart of Accounts
    Each of our clients is set up as a separate institution within our model. As such, each chart of accounts is customized to each institution’s unique specifications. Most other firms use one standard chart of accounts for all of their clients, thereby limiting the amount of customization that can be accomplished in both forecasting and reporting.

  • Historically Accurate Lending Rates
    For those credit unions who offer risk-based loan pricing, we analyze the institution's recent loan origination history to determine its' unique historical RBL average rates, and then use these rates to forecast future growth;

  • CUSIP Level Investment Modeling & Third Party Market Valuations
    We load each client’s investment portfolio into an independent third party bond accounting system, and download all of the details pertaining to each individual security from this system into our model. In addition, we get all of our market valuation data directly from this third party provider, thereby making our pricing completely objective and extremely accurate.

  • Independent Mortgage Prepayment Speed Assumptions
    We obtain the assumptions pertaining to future mortgage prepayment speeds from a reputable third party provider. These speed forecasts are based on national averages, and are segregated by both mortgage type and coupon band. While these assumptions are preferred for the regulatory shock analysis, we also have the capability to calculate each institution’s unique historical prepayment speed experience to use in the income forecast.

  • Back-Testing of Actual Results vs. Most Recent Forecast
    In each set of reports, we include back-testing results which compare the actual results vs. our most recent forecast so that our clients can verify the accuracy of our forecasts.

  • Third Party Economic Forecasting
    Each set of reports includes a current economic commentary from a well-respected group of independent economists. This commentary provides a timely economic forecast for current discussion purposes, as well as a tool for reflecting on the historical context of our forecasts in the future.
As you can see, we believe ALM should not just be used to satisfy the regulators, but instead should be used to forecast future performnace. Isn't it time you took your ALM function to the next level?
Objective Advisors, Inc. is a Registered Investment Advisory firm that is regulated by the Securities & Exchange Commission.
    "I have worked with Objective Advisors since 1995. Throughout the years, they have been a trusted partner and have assisted us in making effective decisions, as well as maximizing earnings and remaining compliant with the ever changing regulatory environment. Our team relies on the quarterly reports as a status of our progress, and finds them invaluable to support our strategic direction."

    $200 million FCU
    Northeast U.S.