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Goals-Based Wealth Management

Jean Brunel (GenSpring)

In this paper, the author discusses the value of a goals-based strategic asset allocation framework together with a comparable approach to estate and financial planning to create a new, integrated goals-based wealth management process. This framework is based on research conducted by behavioral finance experts.
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The Wealth Allocation Framework Revisited

Ashvin Chhabra (Merrill Lynch)

Modern Portfolio Theory has always advocated a diversified portfolio. However, in sharp contrast to these recommendations, a vast majority of investors are not well diversified. This paper introduces the Wealth Allocation framework which enables individual investors to construct appropriate portfolios using all their assets and liabilities and helps them meet their needs for diversification, protection and aspiration.
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According to the author’s research, a goals-based investing framework delivers better solutions than traditional approaches. The approach increases the likelihood of achieving specific goals while heeding the lessons of behavioral finance by capturing the ways that investors think and behave.
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Capital Sufficiency Analysis is the process of determining whether your family’s existing and anticipated financial resources will allow you to achieve your financial and estate planning goals. The analysis provides a framework for making decisions about future spending, investment allocation, estate and philanthropic planning.
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Goals based wealth management is a comprehensive approach to providing guidance to investors that allows them to use those assets to pursue personally meaningful goals. It involves developing a financial plan, identifying and prioritizing goals, analyzing and managing risk, allocating assets, managing asset location for tax purposes, rebalancing portfolios to maintain targeted allocations, and drawing income in the most tax-efficient manner. By incorporating financial planning, tax planning, estate planning and philanthropic planning, together with investment management as part of their overall wealth management strategy, investors can successfully align their assets with their life, and ultimately with their legacy.
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The Bucket Concept – An Old Idea for a New Market

William Olinger, Benjamin Doty (Koss Olinger)

Investors are twice as concerned with losses as they are with gains, so it is easy to imagine scenarios where investors are more unnerved when the value of a total portfolio is impacted by a loss in equity values. This scared investor may order an advisor to liquidate all investments into cash, even though the portfolio is designed for short-term and long-term needs. A bucket strategy aims to address these concerns by taking withdrawals from reliable cash and fixed-income holdings and giving riskier fixed-income and stock holdings time to recover from market downturns.
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