Retail investors, with their varied illusions about wealth, are the weakest link in the financial services ecosystem.

Often these investors don’t receive the attention they deserve. No one benefits when you focus more on your client’s pot of gold than their needs. Relationships that overlook client interests are unsustainable.

Pioneering thought leadership from Jean Brunel, CFA, and others is changing the way private wealth is managed — and for the better. Brunel and his colleagues have provided a robust framework for managing client wealth. He states that identifying and managing client goals is central to the wealth management practice. This is a principle many wealth advisers overlook.

Brunel shared his insights during an engaging master class session on “Goal-Based Wealth Management in Practice” at the 2nd India Wealth Management Conference.

At its core, goal-based wealth management is about identifying and meeting client goals, Brunel says. Unlike modern portfolio theory (MPT), a goal-based framework requires advisers to think and communicate in a language that clients better understand. For example, Brunel prefers to look at a client’s needs, wants, wishes, and dreams. Not meeting these objectives would naturally result in nightmares, fears, worries, and concerns for the client.

Funding and investing money is another key part of this framework, providing a bridge between client savings and financial market returns. Continuous feedback on performance and assessing changes in a client’s perception is the final step in Brunel’s four-stage goal-based model.

For those looking for academic insights, a 2010 paper on “Portfolio Optimization with Mental Accounts,” by Sanjiv Das, Harry Markowitz, Jonathan Scheid, CFA, and Meir Statman, provides an important theoretical basis for goal-based wealth management. According to the authors, the aggregate allocation across portfolios based on goals (mental accounts) is mean variance efficient.

In India, the middle class is growing larger and richer at an explosive pace. Wealth advisers in India are likely to face unprecedented demand. Brunel has two pieces of advice for them:

  1. Be ethical and the client money will follow and be retained longer.
  2. The younger your clients are, the higher a proportion of their incomes should be put into equities.

Below is a list of links I found interesting. Happy reading.

Wisdom on Markets

Wealth Management


Writing and Behavioral

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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.

Image credit: ©

Shreenivas Kunte, CFA

Shreenivas Kunte, CFA, is director of content at CFA Institute, where he contributes financial market insights about India and the developed world. Previously, he taught at and managed SP Jain’s Trade and Applied Research lab, which he helped found. Kunte also served as a country trading strategist at Citigroup’s Tokyo office. He actively contributes to the development sector in India and is an external research scholar at the Indian Institute of Technology Bombay.

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