{"product_id":"modern-asset-allocation-for-wealth-management-isbn-9781119566946","title":"Modern Asset Allocation for Wealth Management","description":"\u003cp\u003e\u003cb\u003eAn authoritative resource for the wealth management industry that bridges the gap between modern perspectives on asset allocation and practical implementation\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eAn advanced yet practical dive into the world of asset allocation\u003ci\u003e, Modern Asset Allocation for Wealth Management\u003c\/i\u003e provides the knowledge financial advisors and their robo-advisor counterparts need to reclaim ownership of the asset allocation component of their fiduciary responsibility. Wealth management practitioners are commonly taught the traditional mean-variance approach in CFA and similar curricula, a method with increasingly limited applicability given the evolution of investment products and our understanding of real-world client preferences. Additionally, financial advisors and researchers typically receive little to no training on how to implement a robust asset allocation framework, a conceptually simple yet practically very challenging task. This timely book offers professional wealth managers and researchers an up-to-date and implementable toolset for managing client portfolios. \u003c\/p\u003e \u003cp\u003eThe information presented in this book far exceeds the basic models and heuristics most commonly used today, presenting advances in asset allocation that have been isolated to academic and institutional portfolio management settings until now, while simultaneously providing a clear framework that advisors can immediately deploy. This rigorous manuscript covers all aspects of creating client portfolios: setting client risk preferences, deciding which assets to include in the portfolio mix, forecasting future asset performance, and running an optimization to set a final allocation. An important resource for all wealth management fiduciaries, this book enables readers to:\u003c\/p\u003e \u003cul\u003e \u003cli\u003eImplement a rigorous yet streamlined asset allocation framework that they can stand behind with conviction\u003c\/li\u003e \u003cli\u003eDeploy both neo-classical and behavioral elements of client preferences to more accurately establish a client risk profile\u003c\/li\u003e \u003cli\u003eIncorporate client financial goals into the asset allocation process systematically and precisely with a simple balance sheet model\u003c\/li\u003e \u003cli\u003eCreate a systematic framework for justifying which assets should be included in client portfolios\u003c\/li\u003e \u003cli\u003eBuild capital market assumptions from historical data via a statistically sound and intuitive process\u003c\/li\u003e \u003cli\u003eRun optimization methods that respect complex client preferences and real-world asset characteristics\u003c\/li\u003e \u003c\/ul\u003e \u003cp\u003e\u003ci\u003eModern Asset Allocation for Wealth Management\u003c\/i\u003e is ideal for practicing financial advisors and researchers in both traditional and robo-advisor settings, as well as advanced undergraduate and graduate courses on asset allocation.\u003c\/p\u003e \u003cp\u003ePreface vii\u003c\/p\u003e \u003cp\u003eAcknowledgments xiii\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 1 Preliminaries 1\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eExpected Utility 2\u003c\/p\u003e \u003cp\u003eIntroduction 2\u003c\/p\u003e \u003cp\u003eMPT is an Approximation 5\u003c\/p\u003e \u003cp\u003eHigher Moment Motivation 8\u003c\/p\u003e \u003cp\u003eModernized Preference Motivation 13\u003c\/p\u003e \u003cp\u003eA Modern Utility Function 15\u003c\/p\u003e \u003cp\u003eReturns-Based EU Maximization 21\u003c\/p\u003e \u003cp\u003eEstimation Error 23\u003c\/p\u003e \u003cp\u003eIntroduction 23\u003c\/p\u003e \u003cp\u003eMinimizing Estimation Error 24\u003c\/p\u003e \u003cp\u003eReducing Sensitivity to Estimation Error 28\u003c\/p\u003e \u003cp\u003eA Modern Definition of Asset Allocation 30\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 2 The Client Risk Profile 33\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eIntroduction 33\u003c\/p\u003e \u003cp\u003eMeasuring Preferences 34\u003c\/p\u003e \u003cp\u003eRisk Aversion 34\u003c\/p\u003e \u003cp\u003eLoss Aversion 39\u003c\/p\u003e \u003cp\u003eReflection 41\u003c\/p\u003e \u003cp\u003eLottery Question Sizing 43\u003c\/p\u003e \u003cp\u003eIncorporating Goals 43\u003c\/p\u003e \u003cp\u003ePreference Moderation via SLR 43\u003c\/p\u003e \u003cp\u003eDiscretionary Wealth 48\u003c\/p\u003e \u003cp\u003eComparison with Monte Carlo 51\u003c\/p\u003e \u003cp\u003eComparison with Glidepaths 52\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 3 Asset Selection 55\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eIntroduction 55\u003c\/p\u003e \u003cp\u003eMoment Contributions 57\u003c\/p\u003e \u003cp\u003eOverview 57\u003c\/p\u003e \u003cp\u003eCalculation 59\u003c\/p\u003e \u003cp\u003eUtility Contribution 62\u003c\/p\u003e \u003cp\u003eMimicking Portfolios 63\u003c\/p\u003e \u003cp\u003eA New Asset Class Paradigm 66\u003c\/p\u003e \u003cp\u003eOverview 66\u003c\/p\u003e \u003cp\u003eA Review of Risk Premia 67\u003c\/p\u003e \u003cp\u003eFrom Assets to Asset Classes 73\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 4 Capital Market Assumptions 79\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eIntroduction 79\u003c\/p\u003e \u003cp\u003eUsing History as Our Forecast 81\u003c\/p\u003e \u003cp\u003eBackground 81\u003c\/p\u003e \u003cp\u003eEstimation Error and Sample Size 83\u003c\/p\u003e \u003cp\u003eStationarity: Does History Repeat? 89\u003c\/p\u003e \u003cp\u003eAdjusting Forecasts 91\u003c\/p\u003e \u003cp\u003ePre-Tax Adjustments 91\u003c\/p\u003e \u003cp\u003ePost-Tax Adjustments 93\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 5 Portfolio Optimization 97\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eIntroduction 97\u003c\/p\u003e \u003cp\u003eOptimization Results 98\u003c\/p\u003e \u003cp\u003eTo MPT or Not to MPT? 103\u003c\/p\u003e \u003cp\u003eAsset Allocation Sensitivity 105\u003c\/p\u003e \u003cp\u003eFinal Remarks 109\u003c\/p\u003e \u003cp\u003eBibliography 111\u003c\/p\u003e \u003cp\u003eIndex 113\u003c\/p\u003e  \u003cp\u003e\u003cb\u003eDAVID M. BERNS, P\u003csmall\u003eH\u003c\/small\u003eD,\u003c\/b\u003e is the Chief Investment Officer and cofounder of Simplify ETFs where he leads the development of novel investment strategies that help advisors produce better outcomes for their clients. David began his finance career at a $5 billion multi-family office where he developed cutting-edge asset allocation, portfolio management, and risk management systems for managing private and institutional wealth across both liquid and illiquid asset classes. David then pivoted to developing short- and intermediate-term investment strategies that, once layered on top of a client's long-term strategic asset allocation, improve both return and risk metrics. David is also the founder and inventor of Portfolio Designer, a cloud-based asset allocation platform empowering advisors to reclaim the asset allocation component of their fiduciary responsibility. \u003c\/p\u003e\u003cp\u003eDavid has a PhD in Physics from the Massachusetts Institute of Technology in the field of Quantum Computation and currently lives in New York City with his wife Carolee and son Henry.   \u003c\/p\u003e\u003cp\u003e\u003ci\u003eModern Asset Allocation for Wealth Management\u003c\/i\u003e and the accompanying software offers advisors a guide to more accurately design portfolios for real-world client preferences while tackling the complexities of the asset allocation process. The author describes a unique framework that provides a modern yet intuitive system for creating real-world asset allocation portfolios. \u003c\/p\u003e\u003cp\u003eThe book explains in detail how to create an investment portfolio from scratch. Step by step, the author shows how to set client risk preferences, decide which assets to include in client portfolios, forecast future asset performance, and blend assets together to form optimal client portfolios. The book is organized in the order in which each asset allocation task is carried out when creating a client's portfolio in practice. \u003c\/p\u003e\u003cp\u003eWhile practical in its approach, the framework presented is rigorous in its application in order to ensure a scalable process that financial advisors can rely on. The asset allocation solution presented rests on the tenets of behavioral finance and the foundations of modern financial economics. The framework also incorporates client financial goals into the asset allocation process systematically and precisely via a novel balance sheet system that is highly focused on risk management. And all tools are tied together with hyper awareness of estimation error and statistical robustness. \u003c\/p\u003e\u003cp\u003eRather than presenting the entire review of asset allocation tools, the author puts the focus on a limited number of tools for each step of the process. The framework outlined offers a modern yet down-to-earth process that the wealth management community can confidently deploy today. \u003c\/p\u003e\u003cp\u003eThis timely and authoritative book offers professional wealth managers and researchers the most current information and an implementable toolset for managing client portfolios.    \u003c\/p\u003e\u003cp\u003e\u003cb\u003ePraise for Modern Asset Allocation for Wealth Management\u003c\/b\u003e \u003c\/p\u003e\u003cp\u003e\"\u003ci\u003eModern Asset Allocation for Wealth Management\u003c\/i\u003e succeeds in its ambitious goal of making asset allocation more intuitive and practical. By accounting for behavioral biases, psychometric testing, and financial goals, to name a few, David Berns enables advisors to implement asset allocation systematically with a sound scientific underpinning. This is a must read for any advisor who wants to truly understand why we invest the way we do and how best to work with clients.\"\u003cbr\u003e —Michael Pompian, CFA, CAIA, CFP, founder and CIO, Sunpointe Investments; author of \u003ci\u003eBehavioral Finance and Wealth Management\u003c\/i\u003e \u003c\/p\u003e\u003cp\u003e\"Historically, Modern Portfolio Theory (MPT) has been an insightful—but utterly useless—tool of modern finance. David Berns flips this situation around and outlines exactly how investors can make MPT great again. I learned so much from this book. Read it.\"\u003cbr\u003e —Wesley R. Gray, PhD, CEO, Alpha Architect; co-author of \u003ci\u003eQuantitative Value\u003c\/i\u003e and\u003ci\u003e Quantitative Momentum\u003c\/i\u003e \u003c\/p\u003e\u003cp\u003e\"David Berns has blazed a trail through the wilderness that lies between the practical challenges of wealth management and the leading edge of quantitative finance. Along the way, readers will learn innovative strategies to confront diverse investor preferences, taxes, risk premia strategies, estimation error, non-normal distributions, and many other real-world challenges. This pioneering guide is rigorous, clear, and relevant. No wealth manager should leave home without it.\"\u003cbr\u003e —Will Kinlaw, Senior Managing Director and Head, State Street Associates; co-author of \u003ci\u003eA Practitioner's Guide to Asset Allocation\u003c\/i\u003e \u003c\/p\u003e\u003cp\u003e\"\u003ci\u003eModern Asset Allocation for Wealth Management\u003c\/i\u003e smartly incorporates behavioral theory to improve client risk preference assessment. The realization that clients don't require the textbook version of an optimal portfolio, and that financial planners should focus on creating a portfolio that clients will stick with during down markets, is an important contribution to the advancement of wealth management.\"\u003cbr\u003e —Michael Guillemette, PhD, CFP, Professor of Personal Financial Planning, Texas Tech University\u003c\/p\u003e","brand":"Wiley","offers":[{"title":"Default Title","offer_id":47989639774437,"sku":"NP9781119566946","price":39.95,"currency_code":"USD","in_stock":false}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/1842\/7735\/files\/9781119566946.jpg?v=1761784917","url":"https:\/\/k12savings.com\/es\/products\/modern-asset-allocation-for-wealth-management-isbn-9781119566946","provider":"K12savings","version":"1.0","type":"link"}