Goals-based wealth management : an integrated and practical approach to changing the structure of wealth advisory practices

274 Pages·2015·3.5 MB·English

by  Jean L. P. Brunel

Goals-Based
Wealth
Management
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Goals-Based
Wealth
Management
An Integrated and Practical
Approach to Changing the Structure
of Wealth Advisory Practices
JEAN L.P. BRUNEL, C.F.A.
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Copyright©2015byJeanBrunel.Allrightsreserved.
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LibraryofCongressCataloging-in-PublicationData:
Brunel,JeanL.P.
Goals-basedwealthmanagement:anintegratedandpracticalapproachtochangingthe
structureofwealthadvisorypractices/JeanL.P.Brunel.
pagescm.–(Wileyfinanceseries)
Includesindex.
ISBN978-1-118-99590-7(cloth/website)1.Portfoliomanagement.
2.Wealth–Management.3.Investmentadvisors.I.Title.
HG4529.5.B7772015
332.6–dc23
2014040792
PrintedintheUnitedStatesofAmerica
10 9 8 7 6 5 4 3 2 1
To Léandre Eloise, Charlie, and Mason, and
hopefully a few more still to be born!

Contents
Acknowledgments xiii
Preface xv
Introduction 1
PARTONE
TheIntegratedWealthManagementChallenge
CHAPTER1
ManyInterrelatedDisciplines 11
MultipleSourcesofCapital 11
ExpandingontheCorporateAnalogy 13
MultipleInteractions 16
EducatingFutureGenerationsandWealthTransfers 18
TheMakeorBuyDecision 20
TheCreationofaWisdomCouncil 21
SummaryandConclusions 22
CHAPTER2
AnExampleofaCrucialInteraction:Tax-Efficiency 23
TheTaxBiteandItsImpactonCompoundReturns 24
ANewAnalysisofCapitalLosses 25
AnExpandedDefinitionofActiveManagement 26
ApplicabilitytoBothAssetandSecurityDecisions 27
AbandoningtheMurkyMiddle:TheBarbellPortfolio 29
ThePotentialRoleandLimitsofDerivativeStrategies 31
SummaryandConclusions 33
vii
viii CONTENTS
CHAPTER3
TheNeedforaFinancialInterpreter 35
WhatMakesMarketsWork? 36
AssetClasses,Sub-AssetClasses,andStrategies 38
DevelopingReasonableExpectations 39
PerformanceAnalysisandReporting 42
SummaryandConclusions 45
PARTTWO
InvestmentPolicyFormulation:Goals-BasedAllocation
CHAPTER4
ABriefJourneythroughInstitutionalTheory 49
FiveImportantFeaturesoftheTypicalInstitutional
InvestmentOrganization 50
AQuickDetourviaAssetLiabilityManagement 55
SummaryandConclusions 56
CHAPTER5
MappingInstitutionalandIndividualIssues 57
TheFirstCrucialDifference 59
ASecondImportantDifference 61
ADifferentWayofDefiningRisk 62
TheLawofLargeNumbers 63
Implications 64
SummaryandConclusions 65
CHAPTER6
Goals-BasedStrategicAssetAllocation 67
TheBasicPrinciple 67
InitialTheoreticalObjections 70
AnAcademicImprimatur 71
AFewSimplePrinciples 72
ItChangesEverything 74
AnInterestingImplication 76
SummaryandConclusions 77