Asset Allocation in Private Wealth Management: Theory Versus Practice
37 Pages Posted: 23 Feb 2013
Date Written: February 21, 2013
This study analyzes the responses to a representative survey of wealth advisors on private wealth management practices, and compares the advisors’ views to academic research in household finance. This study demonstrates that many wealth managers do not apply novel insights proposed by financial economists when advising their clients. Many practitioners focus on managing only the market risk exposure of their clients’ portfolios. Although financial research has stressed the importance of incorporating human capital, planned future expenditures and the investment time horizon into the investor’s asset allocation, these aspects are neglected by most practitioners.
Keywords: private banking, household finance, private wealth management, survey, portfolio choice, asset allocation
JEL Classification: D14, G11, G23
Suggested Citation: Suggested Citation