Changing Equity Premium Implications for Wealth Management Portfolio Design and Implementation

Evensky, Harold
June 2002
Journal of Financial Planning;Jun2002, Vol. 15 Issue 6, p76
Academic Journal
The article discusses the implications of changing equity premium for wealth management portfolio design and implementation in the U.S. Many financial planning professionals, as well as many of their financial services brethren, such as accountants, insurance specialists and money managers, have become specialists in wealth management. Wealth managers combine, for the benefit of their clients, knowledge of the process financial planning with the intellectual capital of the pioneers of modern finance. Many wealth managers have incorporated a number of key concepts of modern investment theory into investment planning for their clients. Today, wealth managers, as well as most financial services firms, provide services based on the premise that a major function of the wealth manager is to advise clients on the allocation of their investments across different asset classes. The primary investment strategy used by many wealth managers has been the adoption of an institutional strategy based on a multi-asset-class or style allocation derived from the use of a mean variance optimization process. The result. The typical end result is a portfolio with assets divided among many independent money managers.


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