Ethical Use of Modeling. Stu Williams, a personal financial planning consultant, uses a "personal wealth builder" financial model to help evaluate his clients' current financial positions and desired retirement and estate goals. Most clients are relatively naive about financial matters. He represents a national life insurance company, a set of mutual fund companies, and other investment programs such as real estate and energy partnerships, precious metals, and annuities. He is properly licensed to provide counsel and to sell these products. He derives the majority of his income from insurance and mutual fund sales. He also does personal advising on a fee-only basis, a minor part of his business.

Stu's model has numerous assumptions built in to allow quick evaluation of a person's wealth potential given that person's current investment program and income levels. Stu knows about these assumptions, many of which he can change given the client situation and need. Much data must be provided by the client, mostly current and historical data and some forecast or desired future needs and goals. From the model comes a set of suggestions for financial planning. These suggestions identify (1) serious gaps in current financial protection, such as disability insurance and accidental death coverage; (2) changes in current investments to increase rates of return or safery; (3) actions needed to achieve near-term financial goals, such as paying for college tuition; (4) retirement planning to ensure adequate income and financial safety to enjoy the "golden years;" and (5) estate planning to ensure that the client's heirs receive their maximum entitlements.

Required Stu has found that the "personal wealth builder" financial model has great credibility with clients. They see it as a "black box" that provides financial answers to difficult questions. Identify possible ethical problems with using this model in Stu's normal client contracts. Give suggestions to Stu about how he can assure his clients of a fair evaluation.