Harold Evensky - The New Wealth Management: The Financial Advisors Guide to Managing and Investing Client Assets

CONTENTS

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Library of Congress Cataloging-in-Publication Data:

Evensky, Harold.

The new wealth management : the financial advisors guide to managing and investing client assets / Harold Evensky, Stephen M. Horan, Thomas R. Robinson.

p. cm. (CFA Institute investment series; 28)

Rev. ed. of: Wealth management. 1997.

Includes bibliographical references and index.

ISBN 978-0-470-62400-5 (cloth); ISBN 978-1-118-03689-1 (ebk); ISBN 978-1-118-03690-7 (ebk); ISBN 978-1-118-03691-4 (ebk)

1. Portfolio management. 2. Financial planners. 3. Investment advisors. I. Horan, Stephen Michael. II. Robinson, Thomas R. III. Evensky, Harold. Wealth management. IV. Title.

HG4529.5.E955 2011

332.6dc22

2010053526

Harold:

To all my wonderful associates at E&K, my two amazing co-authors, and to Deena, who makes it all worthwhile

Stephen:

To Connie and Cayse

Thomas:

To Linda

ACKNOWLEDGMENTS

We would like to thank the many individuals who played important roles in producing this book.

The CFA Institute Investment Series was developed under the leadership and guidance of Robert R. Johnson, CFA, now senior managing director of CFA Institute. Most of the titles in the series are developed out of the CFA Program curriculum. The CFA Program is a generalist program in investment analysis and portfolio management and emphasizes the highest ethical and professional standards for the investment profession. Over time, the number of CFA Program candidates and CFA Institute members who practice in the private wealth area has increased, calling for additional educational content in this important area. The private wealth content in the CFA Program has increased as well, and this new edition of Harold Evenskys Wealth Management is designed to be a practical guide to implementing many of the concepts found in the CFA Program to private wealth practice.

Christopher Wiese managed the process of acquiring the rights to the earlier edition and guided the manuscript through all stages of production. Tina Sapsara kept the authors on task and edited the manuscripts to a uniform style. We also appreciate Deena Katz adding her expertise for our capstone chapter.

FOREWORD

The New Wealth Management is a new edition of the book Wealth Management , originally written by Harold Evensky. Fourteen years may be a long time to wait between editions, but the new edition is more of an overhaul than a mere update. Two co-authors have also been added to the mix, Stephen Horan and Thomas Robinson; both are accomplished authors in their own right. The current book builds on the strong foundation of the earlier edition while encapsulating the many advances and examples of rethinking that have been accomplished during the intervening time.

CFA Institute has participated in the financial revolution in many of its publications. The New Wealth Management is a part of the CFA Institute Investment Series. Most readers are probably familiar with Stephen Horan, because he has been the manager of the education and private wealth management content for the series. He is a professor, frequently published author, and the editor of the CFA Institute book Private Wealth: Wealth Management in Practice . He brings extensive knowledge and an ability to implement it. Thomas Robinson is managing director of the CFA Institute Education Division. He is also a regularly published author in the fields of accounting and financial planning, as well as an accomplished professor. He has had extensive speaking and consulting experience relating to the issues that come up in this book. CFA Institute is fortunate to have these two very active contributors who are so well-versed in the issues that financial practitioners face.

The combination of the renowned Harold Evensky with CFA Institute support makes for a great book. The writers are not only excellent expositors, but also at the forefront of the field. In this book, they include the latest advancements but still make the book practical for the financial advisor. Advisors need to know not only the latest techniques, but also how to communicate with their clients.

Of course, I am partial to some of the discoveries that I have been involved in. The first edition certainly took the holistic approach to investing, in which each individual clients specific circumstances are considered and asset allocation portfolios are customized to the clients needs. But now we have a life-cycle approach to use to determine the appropriate asset allocation for each individual. The approach makes use of a life balance sheet that uses human capital theory to consider both the net employment capital and the financial assets as two separate but related sources to fund the lifetime retirement and other expenditure needs.