Private Wealth

An in depth examination of today s most important wealth management issues Managing the assets of high net worth individuals has become a core business specialty for investment and financial advisors worldwide. Keeping abreast of the latest research in this field is paramount.

Praise for Private Wealth

"The collection of material in Stephen Horan's Private Wealth assembles in one, organized tome a critical core treatment of ideas upon which most aspects of modern private wealth management are founded. It is sure to be a useful reference for those who deal with the challenging task of balancing the myriad needs and preferences of individuals and families alike in the single or multigenerational management of their wealth. I am confident that advisors will find Private Wealth as useful in their practices as we will in wealth management coursework at Wharton."
-Professor Christopher C. Geczy, PhD, Academic Director, Wharton Wealth Management Initiative, The Wharton School

"Private Wealth is an excellent compilation of the best research in private wealth management published by the CFA Institute. Stephen Horan has done a superb job not only at selecting articles that reflect the most forward thinking about the theory and practice of private wealth management, but also at organizing them around the topics that matter the most to today's wealth managers. Private wealth management is undoubtedly one of the most complex areas in investment management for the many dimensions involved in the process of selecting and implementing the appropriate asset allocation for private taxable investors. Wealth managers can find in Private Wealth a helpful reference when confronting today's complex challenges."
-Luis M. Viceira, PhD, Professor of Business Administration, Harvard Business School

Foreword ix
Introduction 1
Part I: Life-Cycle Investing Chapter 1
Chapter 1 The Future of Retirement Planning 7
Robert C. Merton
Reprinted from The Future of Life-Cycle Saving and Investing, The Research Foundation of CFA Institute (October 2007):5-18.
Chapter 2 Is Personal Finance a Science? 19
Paul A. Samuelson
Reprinted from The Future of Life-Cycle Saving and Investing, The Research Foundation of CFA Institute (October 2007):1-4.
Chapter 3 Lifetime Financial Advice: Human Capital, Asset Allocation, and Insurance 23
Roger G. Ibbotson; Moshe A. Milevsky; Peng Chen, CFA; and Kevin X. Zhu
Reprinted from The Research Foundation of CFA Institute (April 2007).
Chapter 4 The Theory of Optimal Life-Cycle Saving and Investing 99
Zvi Bodie, Jonathan Treussard, and Paul Willen
Reprinted from The Future of Life-Cycle Saving and Investing, The Research Foundation of CFA Institute (October 2007):19-37.
Chapter 5 Is Conventional Financial Planning Good for Your Financial Health? 117
Laurence J. Kotlikoff
Reprinted from The Future of Life-Cycle Saving and Investing, The Research Foundation of CFA Institute (October 2007):55-71.
Chapter 6 The Life Care Annuity 133
Mark J. Warshawsky
Reprinted from The Future of Life-Cycle Saving and Investing, The Research Foundation of CFA Institute (October 2007):103-106.
Chapter 7 The Longevity Annuity: An Annuity for Everyone? 137
Jason S. Scott
Reprinted from the Financial Analysts Journal (January/February 2008):40-48.
Chapter 8 A Sustainable Spending Rate without Simulation 151
Moshe A. Milevsky and Chris Robinson

Reprinted from the Financial Analysts Journal (November/December 2005): 89-100.
Chapter 9 Asset Allocation without Unobservable Parameters 169
Michael Stutzer
Reprinted from the Financial Analysts Journal (September/October 2004):38-51.
Part II: Investment Management for Taxable Private Clients
Chapter 10 Investment Management for Taxable Private Investors 191
Jarrod Wilcox, CFA; Jeffrey E. Horvitz; and Dan diBartolomeo
Reprinted from The Research Foundation of CFA Institute (January 2006).
Chapter 11 Core/Satellite Strategies for the High-Net-Worth Investor 299
Clifford H. Quisenberry, CFA
Reprinted from CFA Institute Conference Proceedings Quarterly (December 2006):38-45.
Chapter 12  The Higher Equity Risk Premium Created by Taxation 311
Martin L. Leibowitz
Modified from the Financial Analysts Journal (September/October 2003):28-31.
Chapter 13 Tax Deferral and Tax-Loss Harvesting 317
Jeffrey E. Horvitz
Reprinted from CFA Institute Conference Proceedings: Wealth Management (October 2005):24-30.
Chapter 14 Tax Management, Loss Harvesting, and HIFO Accounting 327
Andrew L. Berkin and Jia Ye
Reprinted from the Financial Analysts Journal (July/August 2003):91-102.
Chapter 15 Investing with a Tax-Effi cient Eye 345
Robert N. Gordon
Reprinted from CFA Institute Conference Proceedings: Wealth Management (October 2005):31-40.
Chapter 16 Diversifying Concentrated Holdings 361
Scott D. Welch
Reprinted from AIMR Conference Proceedings: Investment Counseling for Private Clients III (August 2001):30-35.
Chapter 17 Hedging Low-Cost-Basis Stock 373
Robert N. Gordon
Reprinted from AIMR Conference Proceedings: Investment Counseling for Private Clients III (August 2001):36-43.
Part III: Tax-Efficient Wealth Accumulation
Chapter 18 Tax-Advantaged Savings Accounts and Tax-Efficient Wealth Accumulation 387
Stephen M. Horan, CFA
Reprinted from The Research Foundation of CFA Institute (June 2005).
Chapter 19 After-Tax Asset Allocation 475
William Reichenstein, CFA
Reprinted from the Financial Analysts Journal (July/August 2006):14-19.
Chapter 20 Withdrawal Location with Progressive Tax Rates 485
Stephen M. Horan, CFA
Reprinted from the Financial Analysts Journal (November/December 2006):77-87.
Part IV: After-Tax Performance Measurement
Chapter 21 After-Tax Performance Evaluation 507
James M. Poterba
Reprinted from AIMR Conference Proceedings: Investment Counseling for Private Clients II (August 2000):58-67.
Chapter 22 Taxable Benchmarks: The Complexity Increases 521
Lee N. Price, CFA
Reprinted from AIMR Conference Proceedings: Investment Counseling for Private Clients III (August 2001):54-64.
Chapter 23 Explaining After-Tax Mutual Fund Performance 535
James D. Peterson; Paul A. Pietranico, CFA; Mark W. Riepe, CFA; and Fran Xu, CFA
Reprinted from the Financial Analysts Journal (January/February 2002):75-86.
About the Contributors 553
Index 555