Tag Archives: wealth-manager

By Susan Hoover January was a turbulent month for European markets that left investors grappling with uncertainty. The Swiss National Bank removed the long-standing euro peg from the Swiss franc . The European Central Bank began an open-ended quantitative easing program . And in Greece, the newly elected Syriza party vowed to renegotiate the country’s bailout package , which has implications for the stability of the entire eurozone. Wealth managers and advisers of high-net-worth clients now find themselves undertaking two separate but equally important tasks: identifying investment opportunities and reassuring nervous clients at risk of abandoning their current investment strategies. Both of these tasks are easier for private wealth managers who understand their clients’ goals and anxieties. Jean L.P. Brunel, CFA, managing principal of Brunel Associates, argues that a detailed analysis of client goals will allow advisers to construct portfolios that more accurately reflect risk profiles while seeking out sources of investment returns. In these resources from CFA Institute, Brunel explains his ideas in greater detail: Psychological Influences on Investor Decisions : Brunel argues that current tools for optimizing private client portfolios are powerful and insightful, but clients do not have the time to understand them. In this presentation, he discusses how advisers must take highly quantitative results based on rough answers and adapt them to changing client needs, goals, and risk over a lifetime – in effect, putting themselves in the shoes of their clients to develop a goal-oriented approach to asset allocation. Alternative Assets : In this presentation, Brunel questions the industry definition of “alternative assets,” suggesting that inappropriate benchmarks are used to measure them. The lower-than-expected liquidity and lower-than-expected downside risk protection of alternative assets mean that proper benchmarks are especially important, and an increased emphasis should be placed on manager selection. The industry has matured, according to Brunel, which means that there are solid opportunities, particularly in relative value. Goals-Based Wealth Management in Practice : The 2008 global financial crisis created opportunities for advisers ready to meet client concerns by focusing on those clients’ goals. In this article, Brunel discusses ways that wealth managers can address family issues, using goals-based wealth management concepts to generate specific portfolios driven by the client’s expressed goal. Brunel’s model allows for a high degree of flexibility and responsiveness to client needs while retaining a practical level of standardization. Is a Behavioral Finance-Based Allocation Really Suboptimal? Modern portfolio theory works marvelously in a world of institutions, but individual investors do not make decisions according to the logic of financial theory. According to Brunel, high-net-worth investors need an approach that reduces the likelihood of suboptimal performance while recognizing their unique behavioral tendencies. In this presentation, he discusses how a goal-based allocation that is adjusted to include overall risk optimization can assemble portfolios that are better matched to client intuition, which means portfolios that clients are more likely to accept and retain. Goal-Based Asset Allocation : In this presentation, Brunel explores a sequential approach to setting goals, stating that advisers need to change the definition of risk to mean “the probability of not achieving one’s goal.” According to Brunel, integrated wealth planning for individuals must evolve into an analysis of the client’s goals – what matters to the family, what are the worst nightmares, and what are the most cherished dreams. He further discusses the skills necessary to identify and quantify assets for each goal to match its risk profile. Private Asset Management or Private Wealth Management? Private asset management can be viewed as a separate discipline from private wealth management, even though the two terms are frequently used interchangeably. In this article, Brunel explains that private wealth management must go beyond the asset allocation and tax efficiency that is the focus of private asset management, encompassing more extensive issues and introducing more complex interactions. The larger number of factors involved leads to an exponentially larger number of possible interactions. Disclaimer: Please note that the content of this site should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute. Share this article with a colleague