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Jean L. P. Brunel. Goals-Based Wealth Management
Acknowledgments
Preface
Introduction
Part One. The Integrated Wealth Management Challenge
Chapter 1. Many Interrelated Disciplines
Multiple Sources of Capital
Expanding on the Corporate Analogy
Multiple Interactions9
Educating Future Generations and Wealth Transfers
The Make or Buy Decision
The Creation of a Wisdom Council
Summary and Conclusions
Chapter 2. An Example of a Crucial Interaction: Tax-Efficiency
The Tax Bite and Its Impact on Compound Returns
A New Analysis of Capital Losses
An Expanded Definition of Active Management
Applicability to Both Asset and Security Decisions
Abandoning the Murky Middle: The Barbell Portfolio27
The Potential Role and Limits of Derivative Strategies
Summary and Conclusions
Chapter 3. The Need for a Financial Interpreter (Given the Complexity of the Investment Process)
What Makes Markets Work?
Asset Classes, Sub-Asset Classes, and Strategies
Developing Reasonable Expectations35
Performance Analysis and Reporting
Summary and Conclusions
Part Two. Investment Policy Formulation: Goals-Based Allocation
Chapter 4. A Brief Journey through Institutional Theory
Five Important Features of the Typical Institutional Investment Organization
A Quick Detour via Asset Liability Management
Summary and Conclusions
Chapter 5. Mapping Institutional and Individual Issues
The First Crucial Difference
A Second Important Difference
A Different Way of Defining Risk
The Law of Large Numbers
Implications
Summary and Conclusions
Chapter 6. Goals-Based Strategic Asset Allocation
The Basic Principle
Initial Theoretical Objections
An Academic Imprimatur
A Few Simple Principles52
It Changes Everything
An Interesting Implication
Summary and Conclusions
Part Three. Goals-Based Wealth Management Implementation
Chapter 7. Dealing with the Implications of the Process
Covering a Set Number of Bases
Mapping Asset Classes and Strategies to Goals
Understanding Limitations
Dealing with Client Objections
A Three-Phase Process
Summary and Conclusions
Chapter 8. Creating Goals Modules
Developing General Capital Market Expectations
Describing Sufficiently Generic and Specific Goals
Creating Constraints Appropriate to Each Goal
Optimizing the Composition of Each Module
A Possible Example
Summary and Conclusions
Chapter 9. Working to Understand Client Goals and Goal Allocations
Identifying Crucial Initial Client Constraints
Determining Whether Any Constraint Is a Show-Stopper
Time Horizon and Required Probability of Success
Settling on the Appropriate Module
Sizing Assets Needed to Meet Each Goal
A Possible Example
Summary and Conclusions
Chapter 10. Finalizing a Goals-Based Policy Allocation
Two Possible Approaches
Working from Assets and Modules to a Whole
Description of Deviation Ranges
Our Original Example, Modified and Completed
Summary and Conclusions
Chapter 11. Managing the Portfolio Tactically
The Complexity in the Absence of a Systematic Tool
Introducing the Concept of a Tilt Model
Five Possible Variations on the Same Theme
A Major Pitfall
A Possible Example
Summary and Conclusions
Chapter 12. Portfolio Reporting
The Current Challenge
A Simple Analogy
Adding Taxes Makes Things Even More Complex
Summary and Conclusions
Part Four. Managing an Advisory Practice
Chapter 13. The Currently Typical Firm Structure
Many Chiefs and Few Indians
The Root of the Challenge
Contrary Examples in the Legal and Medical Fields
A Simple Illustration
Summary and Conclusions
Chapter 14. Teams Versus Individuals
Too Many Disciplines for Anyone to Master All of Them Fully
Specialists, When Left Alone, Lead to Silos
The Crucial Role of the Team Coach
Only One Individual Can Play That Role
Summary and Conclusions
Chapter 15. An Alternative Structure
The Primordial Role of the Advisor
The Missions the Advisor Should Not Accept
The Difference Between Must and Does Not Need to Be Tailored
Imagining a Different Firm and Process Architecture
The Kind of Leverage That Can Be Built
Dealing with Objections
A Difficult Decision
Summary and Conclusions
Conclusion
About the Companion Website
About the Author
Отрывок из книги
Goals-Based Wealth Management
An Integrated and Practical Approach to Changing the Structure of Wealth Advisory Practices
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Charlotte Beyer, who founded the Institute for Private Investors, used to compare each affluent individual or family to a company, which she called “My Wealth, Inc.” Taking her point a bit further, you can observe that there has hardly ever been a successful chief executive officer of a successful large company who was not aware first that the company comprised many divisions – each focused on some different aspect of the business, such as research, engineering, production, marketing, client service, legal and regulatory, human resources, and the like – and second that these divisions had to be efficiently coordinated so that the whole was more than the sum of the parts. The same construct can be imagined for a wealthy family, even if wealth is modest, in that individuals need to be aware of the several issues on which the family, the head of which could be called the “CEO of My Wealth Inc.,” should focus.
Today, the industry neatly divides into three general categories of providers. First, you have the manufacturers; their function is to create the products and services the affluent and their advisors need to use. Second, you have advisors who have elected to focus on only one or two of the many dimensions of the problem faced by their clients; they may be tax lawyers, estate lawyers, certified public accountants, investment advisors, philanthropic consultants or managers, family education or governance specialists, and many others. Finally, you have a wide variety of advisors and consultants who try to take a holistic view of the overall problem, effectively seeking to make money sitting next to the client, on the same side of the table as the family. That they are not all equally successful should not surprise; what may, however, be surprising is that quite a few of them naturally believe that they are exactly what the doctor ordered, when in fact the problem is quite a bit more complex than their current understanding of it.
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