A New Approach to Goals-Based Wealth Management

34 Pages Posted: 12 Feb 2018

See all articles by Sanjiv Ranjan Das

Sanjiv Ranjan Das

Santa Clara University - Leavey School of Business

Daniel N Ostrov

Santa Clara University

Anand Radhakrishnan

Franklin Templeton Investments

Deep Srivastav

Franklin Templeton Investments

Date Written: February 4, 2018

Abstract

We introduce a novel framework for goals-based wealth management (GBWM), where risk is understood as the probability of investors not attaining their goals, not just the standard deviation of investors' portfolios. Our framework is based on a foundation of developments in behavioral economics and finance and is consistent with modern portfolio theory. Using a simple geometric analysis, we determine a specifi c portfolio that matches each individual investor's stated goals. Our approach requires information from the investor about their goals, elicited in a clear manner that market research shows is superior to common current practices. This new approach can improve the communication between advisors and clients and produce better advice for enabling clients to attain their goals with high probability through the use of efficient portfolios.

Keywords: goals, wealth management

JEL Classification: G02, G11

Suggested Citation

Das, Sanjiv Ranjan and Ostrov, Daniel N and Radhakrishnan, Anand and Srivastav, Deep, A New Approach to Goals-Based Wealth Management (February 4, 2018). Available at SSRN: https://ssrn.com/abstract=3117765 or http://dx.doi.org/10.2139/ssrn.3117765

Sanjiv Ranjan Das (Contact Author)

Santa Clara University - Leavey School of Business ( email )

Department of Finance
316M Lucas Hall
Santa Clara, CA 95053
United States

HOME PAGE: http://algo.scu.edu/~sanjivdas/

Daniel N Ostrov

Santa Clara University ( email )

500 El Camino Real
Santa Clara, CA 95053
United States
4085544551 (Phone)
4085544551 (Fax)

Anand Radhakrishnan

Franklin Templeton Investments ( email )

Multi Asset Strategies
P.O. Box 997152
San Mateo, CA 95899-7152
United States

Deep Srivastav

Franklin Templeton Investments ( email )

Multi Asset Strategies
P.O. Box 997152
San Mateo, CA 95899-7152
United States

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