CFA三级基础：私人财富管理-标准版

Management三级培训项目LevelIIISessionContentSession1-2Session3Session4Session5Session6Session7-8ETHICS&PROFESSIONAL(1)&(2)FINANCEMARKETANDDECISIONSINPORTFOLIOMANAGEMENTANDCURRENCYMANAGEMENTFIXED-INCOMEPORTFOLIOMANAGEMENT(1)&(2)Session9-10EQUITYPORTFOLIOMANAGEMENT(1)&(2)Session11INVESTMENTSPORTFOLIOMANAGEMENTStudySession12-13MANAGEMENTSession14Session15Session16PORTFOLIOMANAGEMENTINSTITUTIONALTRADING,PERFORMANCEANDMANAGERSELECTIONINPORTFOLIOMANAGEMENTANDRISKMANAGEMENTSS12:Management(1)Management•R28OverviewWealthManagement•R29andWealthManagementaContext•R30EstatePlanningaContextSS13:management(2)•R31ConcentratedSingle-Asset•R32RiskManagementforIndividuals28ClientsversusInstitutionalClientsUnderstandingClientsInvestmentPlanningFrameworkInvestmentPortfolioConstructionandMonitoringEthicalandComplianceConsiderationsWealthManagementClientSegmentsPrivateClientsversusInstitutionalClientsclientsinstitutionalclientshavedifferentconcerns,includingthefollowing:InvestmentObjectivesConstraintsOtherDistinctionsInstitutionalClientsInvestmentObjectivesClientsfinancialsecurityduringtheretirementyears;theprovidefinancialsupportfamilymembers;thefundingphilanthropicgoals;Privateclientinvestmentobjectivesoftencompetewithoneanotherandmaychangeovertime;InstitutionalClientsIncontrastclients,institutionalclientstendhavemoreclearlydefinedobjectives,whichtypicallyrelatedaspecificstream.PrivateClientsversusInstitutionalClientsConstraintsTimehorizon:Ingeneral,individualinvestorshaveashorterhorizonthaninstitutionalinvestors,whosehorizonoftentheoreticallyinfinite.Scale:Ingeneral,individualinvestorportfoliostendtobesmallerinsize(orscale)thanthoseofinstitutionalinvestors.:areasignificantandcomplexconsiderationformanyindividualinvestors,andtheyvarybyjurisdiction.PrivateClientsversusInstitutionalClients3.OtherDistinctionsInvestmentGovernanceInstitutionalinvestorstypicallya.Byforindividualinvestorslessformal.InvestmentSophisticationInstitutionalinvestorsahigherinvestorwell.Unlikeinstitutionalclients,privateclientsnormallybenefitaframework.Asaclientsvulnerablemakingdecisions.PrivateClientsversusInstitutionalClients3.OtherDistinctionsRegulationIncountries,regulatoryisforindividualinstitutionalinvestors.InontwoinvestorInindividualinvestoraUniquenessandComplexityclientswithsimilarfinancialconsiderationsobjectivesnevertheless.Multipleinfluenceconcerns—familyupbringing,workhistory,wealth,experience,friends,geographiclocation.PrivateClientsversusInstitutionalClientsSummaryclientsInstitutionalclientsdiverseinvestmentobjectives(mayclearlyquantified)specific,clearlydefinedinvestmentobjectivesobjectiveshorizonScaleashortertimelargersmaller)Constraintsmayatax-exemptsignificantcomplexlessformalgovernanceformalgovernanceahigherdegreeinvestmentOtherDistinctionsSophisticationregulatoryComplexitySimilarobjective,differentinvestmentstrategiesSimilarobjective,similarstrategiesUnderstandingPrivateClientsInformationNeededAdvisingClientsPersonalInformationFinancialInformationClientxConsiderationsClientClientandSoftSkillsforManagers2.1inInformationthefamilysituation,includingmaritalstatus,thenumberchildrenandgrandchildren,andtheagesfamilymembers;clientidentification;employmentandcareerinformation;thesourcesawealth;investmentreturnobjective;preferencesoradesireconsiderenvironmental,social,andgovernance(ESG)issues;financialobjectivesandrisktolerance.2.1inInformationAssets•Cashanddepositaccounts•accounts•Retirementaccounts•Consumerdebt,suchascreditcardbalancesandoutstanding•Automobile•Otheremployeebenefits,suchasrestrictedstockorstockoptions•Ownershipinterests(stock)businesses••Property-relatedloans,suchasmortgagesandhomeequity(orlinescredit)•Cash-valueinsurance•Realincludingresidences,rentalandland•Margindebtbrokerageaccounts•Otherpersonalassets(e.g.,automobiles,art,orjewelry)2.1inClientConsiderationsCommonCategoriessincome.Theseincludetaxesonsalaries,interest,dividends,capitalgains,andrentalincome.Wealth-based.Theseincludetaxesontheholdingcertaintypesproperty(e.g.,realestate)andtaxesonthetransferwealth(e.g.,taxesoninheritance).sconsumption/spending.Theseincludesalestaxesandvalue-addedtaxes.2.1inClientConsiderations--BasicxStrategiesavoidance.conformboththespiritandtheletterthetaxcodesjurisdictionswithtaxingvs.x(circumventingtaxobligationsbyillegalmeans).permitearningsandfuturewithdrawals;wealthtransfertechniques.reduction.tax-exemptbonds;tax-efficientassetclassesdeferral.deferringtherecognitioncertaintaxesuntilalaterdate,clientscanbenefitcompoundingportfolioreturnsthatnotdiminishedbyperiodictaxpayments.Someinvestorsaprogressivetaxsystemmayalsoseekdefertaxesbecausetheylowerfuturetaxrates.portfolioExampleRodriguezwithherwealthRaj,herfinancialimportanceinfinancialInvestintwoAnpermitsearningswithdrawalsAnpermitsearningswhenwithdrawnwithundesirablecharacteristicsinistax-efficient.DelayapositionuntilfollowingIdentifystrategies)—ordeferral—inExampleSolution:Thefirstrecommendationrepresentsbothtaxavoidanceandtaxdeferral.Withtheaccountthatpermitstax-freeaccumulationanddistributions,Rodriguezwouldbeavoidingtaxes.Withtheaccountthatpermitstax-freeaccumulationbutresultsincometaxesupondistribution,Rodriguezwouldbedeferringtaxes.Thesecondrecommendationanexampletaxreductionbecausetherecommendedassetclasswouldincurlowertaxes.Therecommendationanexampletaxdeferralandmayalsobeanexampletaxreductiontaxratedeclinesafterretirement.2.1inOtherInformationEstateplanapplicablejurisdictions),copieslegalandgoverningdocuments,suchasandtrustdocuments;Lifeinsurance,disabilityinsurance,excesscoverage,andanyotherinsurancecoverage;Wealthmanagersandclientsnormallyagreeonwhocanapproveand/orchangeinvestmentpolicies,whocanauthorizetradingandwhocanauthorizemoneytransfers.Wealthmanagersseekinformationclients’serviceneedsandexpectations.Thewealthmanagerandtheclientshouldhaveaclearunderstandingwhatinformationshouldandshouldnotbesharedwithotherserviceprofessionals.2.2Financialnotapparent,defined,ormeasurable:theymaybeexpressedbyclientsaswishes,desires,oraspirations.PlannedPlannedthosethatcanbereasonablyestimatedorquantifiedwithinanexpectedhorizon.Retirement.Maintainingacomfortablelifestylebeyondtheirworkingyearsaformostclients.Specificpurchases.beafunctionthelevelwealthand/orstagelife.Education.Clientsoftenwishfundtheireducation.events.(e.g.weddings)transfer.Whenclientshaveadefiniteamountinheritancethattheywishthismayneedbeprioritizedoverothergoals.Philanthropy.Clientsoftenwishcharitabledonationsduringoraftertheirlifetime.2.2UnplannedUnplannedthoserelatedunforeseenfinancialneeds.(difficultestimatethetimingandtheamountfundingneeded)Propertyrepairs.Althoughhouseholdsmaybeinsuredagainstlossesorcatastrophes,clientsmayfaceadditionalspendingneedsinsurancedoesnotfullycoversuchevents.Medicalexpenses.clienthouseholdsnormallyhavemedicalinsuranceforillnessorhospitalization,buthealthinsurancemaynotcoverallmedicalexpenses.Arelatedissuesomelocationsthepotentialcosteldercareforoneselforfamilymembers.Otherunforeseenspending.Whenestablishingclientgoals,wealthmanagersconsidergoalquantification,goalandgoalchanges.Example-LeeamanagingdirectorfortheinvestmentfirmAcme&Bass,whichlocatedtheAsia-Pacificregion.Leeyearsold,married,andhastwochildren,agesandHeandhisfamilyresideahomethattheyownSingapore.InaconversationwithhiswealthLeestatesthathewishesfundtheundergraduateforhischildrenstudyabroad.LeeexpectsthecostbeperyeaLeealsowishesfundhisweddingsatsomepointthefuture.Becausetheeducationcostsoccurthenext5–years,MLeestatesthattheyhistopprioritLeeanticipatesworkinguntilageanddoesnotknowhowmuchheandhiswifeneedfundtheirretirementlifestyle.HementionshisdesirepurchaseaflatLondonandletasparttheirretirementplan.Theflatwouldcostmillion.LeealsoconcernedaboutthefuturehealthcareexpenseshisandwhatdegreeheandhiswifemayneedsupportthemExample-Identifyplannedplanned(a)fundinghiseducation;fundinghisweddings;(c)fundinghisandhisretirement;andpurchasingandsubsequentlyletting(renting)aflatLondon.Identifyunplannedunplannedthefuturehealthcareexpenseshisparents,aswellaspossibleuninsuredpropertyfortheSingaporeresidenceand,purchased,theirLondonflat.Example-thegoalquantificationforLee.Leehasquantifiedtheeducationfundingandtheflatpurchase.HeandhiswealthmanagershouldworkestimatethecosttheweddingsforchildrenandtheanticipatedretirementlifestyleneedsforLeeandhiswife.thegoalforLee.Leestatesthathisfirstpriorityeducationfundingforhischildren.theaneedshouldnotbethesoledeterminantIffundingtheireducationcostsleaveLeeandhiswifeunpreparedforretirement,forexample,theymaywishtheirpriorities.2.3ClientRiskKeytermsforasetrisk-relatedconcepts:tolerancerefersthelevelriskanindividualandtobear.Risktolerancetheinverseriskaversion.theacceptrisk.Thedifferencebetweenriskcapacityandrisktolerancethatriskcapacitymoreobjectivenature,whilerisktolerancerelatesattitude.perceptionansubjectiveassessmenttheinvolvedaninvestmentoutcome.Howaclientperceivestheriskinessaninvestmentdecisionortheinvestmentclimate—dependsonthecircumstancesinvolved.2.3ClientRisktolerance:Willingness(Risktolerance)InvestmentstylePsychologicalSelf-statement(Riskcapacity).Timehorizonportfoliosize(spendingneeds/portfoliosize)Situationtolerance(Education)Willingness>ReturnObjective=WillingnessWillingness(Reevaluation)Willingness<AbilityReturnObjective=(Education)2.3ClientRiskWealthmanagersoftenquestionnairesassessclients’risktolerance.Theresultarisktolerancequestionnaire,typicallyanumericalscore,oftenusedasaninputtheinvestmentplanningprocess.Conversationenablethewealthmanagereducateaclientaboutinvestmentrisk.Clientsoftenhavemultiplegoalsobjectives,theirrisktolerancemayyfordifferentgoals.alowrisktolerancewithrespectnear-termbutahigherrisktolerancewhencomeslonger-termgoals.2.4SoftSkillsforSkillsrepresenttheknowledgeexpertisenecessaryinvestmentadviceclients.CapitalmarketsPortfolioconstructionFinancialplanningknowledge.skills.skills.Language2.4SoftSkillsforSoftSkills(non-technical)Softtypicallyinterpersonalrelationships—thatis,theeffectivelyinteractwithothers.Communicationskills.Socialskills.Educationandcoachingskills.Businessdevelopmentandsalesskills.ExampleJohn,awealthrecentlyreceivedfeedbackclientsandcolleaguesasparthisperformanceClientscommentedfavorablyonhowMüllercoordinateswithexternaltaxandlegalprofessionalsandonhowwellhelistensandunderstandshisclients’needs.ColleaguesremarkedonMüllerknowledgetraditionalandalternativeassetclassesandhisobtainnewclientengagements.DescribewhichtechnicalandsoftMüllerdemonstratedExampleSolutions:InhisperformanceMüllerdemonstratedthetechnicalcapitalmarketsproficiencyandfinancialplanningknowledge.Müllercapitalmarketsproficiencywasshownthroughhisknowledgetraditionalandalternativeassetclasses,whilehisfinancialplanningknowledgewasshownbyhissuccessfulcoordinationwithtaxandlegalprofessionals.Müllerdemonstratedthesoftcommunicationandbusinessdevelopmentandsales.Communicationwereshownbyhislistenwellandunderstandclientneeds,whilebusinessdevelopmentandsaleswereshownbyhisrecordobtainingnewclientengagements.Afterdevelopinganunderstandingoftheirclients,wealthmanagersbegintheprocessofhelpingclientsmeettheirobjectives.CapitalSufficiencyAnalysis(Capitalneedsanalysis)Theprocessbywhichawealthmanagerdetermineswhetheraclienthas,orislikelytoaccumulate,sufficientfinancialresourcestomeethisorherobjectives.RetirementPlanning3.1MethodsforCapitalSufficiencyDeterministicForecastingMethodPortfoliogrowthoccursastraight-linemanner.Inputsaportfolioreturnassumptionthecurrenttheportfolio(PV);anticipatedfuturecontributionstheportfolio(+CF);cashflowstheportfoliothatrepresentclientneeds(-CF).Simpletounderstand;withrespectthepotentialfutureoutcomes.3.1MonteGeneratesrandomoutcomesaccordingassumedprobabilitydistributionsforseparatevariables.(notwholeportfolio).Allowsawealthmanagermodeltheuncertaintyorthefutureoutcome.Thetableshowsthepercentagetrialsatagivenhorizonwhichtheclientsuccessfullyachievedherobjective.MonteCarloSimulationPortfolioPortfolioPortfolio98%88%69%ExampleBasedonExhibits1andthethatNjauwillbeablemeethercharitableclosestto:A.C.ExampleCorrectAnswer:B.TheMonteCarlosimulationshowsthatNjauhasahavinganamountexceedingSincecharitablepledgeUdhaminishehasaslightlygreaterthanmeetingorexceedinghercharitablepledge3.1InterpretingMonteSimulationWealthmanagerstendguideclientstowarda–probabilitysuccess,althoughnoindustrystandardrangeexists.Whenthesuccessbelowanacceptablerange,potentialsolutionsincludethefollowing:IncreasingtheamountcontributionstowardaReducingtheamountDelayingthetiminga(e.g.,afewyearslaterthanoriginallyplanned)Adoptinganinvestmentstrategywithhigherexpectedreturns,albeitwithintheacceptablerisktoleranceandriskcapacity3.2RetirementWealthmanagersmayuseseveraldifferentmethodsanalyzearetirement.ThreecommonmethodsMortalitytablesAnnuitiesMontesimulation3.2MortalityAmortalitytableindicatesindividuallifespecifiedPlanAgeLifeExpectancyProbability012345Inpractice,awealthamortalitypresentaretirementspendingneedsprobabilitiesbasedlifeexpectancytoannualexpectedcashoutflows.Drawbacks:individuallivingacertainexceedpopulation.3.2Annuitiesaseriesfixedpayments,eitherfororforaspecifiedperiod,exchangeforalumpsumpayment.forms.Withanimmediateannuit,anindividual(calledthe“annuitant”)anlumpsum,returnforaguaranteespecifiedfuturemonthlypayments—beginningimmediately—overaspecifiedperiodtime.Withadeferredannuitthespecifiedfuturemonthlypaymentsbeginalaterdate.Asimplewaycalculatingthepresentadesiredretirementspendingbypricingan3.2CarloAdvantagesMonteCarloSimulationapplicabilitythe.aggregatingtheresultsmanyprobability-basedestimateskey,theoverallmeetingretirementneedsgenerated,canflexiblymodeldifferentandexploreissuesthatimportanttoclients.LimitationsMonteCarloSimulationItonlyamethodestimation;cannotpredictthefuture.theoutputMonteCarlosimulationcanbehighlysensitivetochangesinputassumptions.MonteCarlooutputincludesthereachinga(orgoals)butnottheExampleSilinextusesthreeapproachestoanalyzehisretirementgoals:1Siliconsiderswillliveacertainhisinflation-adjustedwillstilllivinginagivenThisallowshimhisoutflows.2SilideterminesspecifyhislevelduringaseriesfixedHeserieshisinwillhis3SilimodelsuncertaintyindividuallyitsowndistributionaforHedetermineoverallhisobjectives.SilithisaflexibleallowshimincludingExample:AnswersExample:AnswersBehavioralConsiderationsPlanningHeightenedlossaversion.Someinvestors.Consumptiongaps.Duelossaversionuncertaintyfinanciallesswouldpredict,inabetweenannuityIndividualsinvestinannuities.forpuzzleincludeinvestors’givelifestyle,theirdislikelosingover,inhighannuities.Preferenceinvestmentincomecapitalappreciation.EvidenceforthisbehaviorincludesinvestorsdividendincomesellingsecuritiespossibleexplanationisinvestorslackwithThistheoryonlyincomenotisa.Theinvestmentpolicystatement(IPS)isawrittenplanningdocumentthatdescribesainvestmentobjectivesandrisktoleranceoverarelevanttimehorizon,alongwiththeconstraintsthatapplytotheportfolio.TheIPSisalsoanoperatingmanual,listingkeyongoingmanagementresponsibilities.AdvantagesOneadvantageisthattheIPSencouragesinvestmentdisciplineandreinforcesthecommitmenttofollowtheAsecondadvantageisthattheIPSfocusesonlong-termgoalsratherthanshort-termperformance.Aninvestmentpolicystatement(IPS)foranindividualincludesthefollowingparts:BackgroundandInvestmentObjectivesInvestmentParametersPortfolioAssetAllocationPortfolioManagementDutiesandResponsibilitiesIPSAppendix4.1TheandinvestmentobjectivespartstheIPS.Backgrounditemscommonlyincludethenameandage,aswellaspersonalandfinancialinformation.Commonobjectivesincludefundinglifestyleneedsduringretirement,supportingfamilymembers,fundingphilanthropicactivities,andmeetingbequestgoals.Investmentobjectivesshouldbedetailedandquantifiedwheneverpossible.Inasituationmultipleobjectives,thewealthmanagershouldnotewhichtheobjectivesprimary.4.1Theinvestmentobjective,whentheassetallocationandthewealthmanagercapitalmarketassumptions,shouldtheinputsasufficiency.Wheneverthecapitalsufficiencyanalysisdoesnotsupporttheinvestmentobjective,thewealthmanagermustworkwiththeclientestablisharevisedobjectivethatthemanagerjudgesbeachievable.TheIPSshouldincludethemarkettheportfolioandtheaccountsthatuptheportfolio。Theandinvestmentobjectivessectionshoulddescribeanyotherinvestmentassetstheclientmayhaveoutsidetheportfolioanyflowsfromexternal-51,isainvestorinisengineerinHisportfolioCNY16.5millioninaliquidsecuritiesportfolio,includingpositionsinwhichCNY9millionHeincomingHeinvestCNY330,000perinflation-adjusted,inuntilHeahighertoleranceforhisliquidportfoliolarge-capHehistimehorizonis10sinceretiringin10HewillCNY1millioninflation-adjusted,supporthislifestyleinHewisheshisasignificantinheritanceforhis-Discusshowwealthmanagershouldcreatetheinvestmentobjectivessectionthisportfolioissupportlifestyleinretirementprovideaninheritancehischildren.Asideinhisportfolio,hasprivaterealestateinvestmentsatapproximatelyCNY9millionislikelythishisnetworthovernextnotneedingdistributionsthisportfoliofor10estimatesanannual,inflation-adjustedlifestyleneedapproximatelyCNY1millionperyearbeginningathisretirementin10years.Hiswillsatisfiedinpartportfoliodistributionsinhisportfolio.wealthwillcontinueworkwithquantifyhisobjectivehisportfoliodistributionishis.4.2.WealthmanagersshouldconsidertheandwillingnesswithstandportfolioInvestmentTimeHorizon.Ainvestmenthorizonindicatedsection,butoftenasarangeratherthanaspecificnumberyears.e.g.exceedsyears,lessthanyears.-HorizonInExample-BackgroundandInvestmentObjectives,HuangZhuoWeistatedthathisinvestmenthorizonyearsbecauseheexpectsatthatpoint.howhiswealthmanagershouldreflectinvestmenttheIPS.trueinvestmenthorizonthroughretirement,aperiodthatbemuchlongerthanyears.wealthmanagershoulddescribehistimeexceedingyears.4.2AssetPreferencesTheIPSshouldindicatetheassetclassesthatcompriseaportfolio.thewealthmanagermaytheassetclassesthattheclienthasnotapproved.Somewealthmanagersincludeashortnarrativeabouttheimportanceassetallocationandtheprocessthatthewealthmanagerusededucatetheclientaboutassetclassriskandreturncharacteristics.Thenarrativecaptureswrittenformtherisk–returntrade-offthattheclientexploredwiththewealthmanagerduringtheinformation-gatheringprocess.4.2OtherInvestmentPreferencesThissectionmaycontainageneralcommentaboutorspecificcriteriaaboutfortheseESGpreferences.Otherinvestmentpreferencesdescribedsectionmightbealegacy”holdingthattheclientwishesoranon-recommendedinvestmentthattheclientwishes4.2LiquidityPreferences.Iftheclienthasneedsthatnotestablishedtheandinvestmentobjectivessection(e.g.acashreserve).Ifthepreferenceconstrainsassetclassselectiondecisionsorimplementationdecisions.Constraints.investmentoptionscertainaccounts(e.g.employer-sponsoreddefinedcontributionretirementplanaccount)unrealizedcapitalgainsESG-relatedconstraints4.3PortfolioThissectioncontainsthetargetforeachtheportfolio.Wealthmanagerswhouseastrategicapproachtypicallydefineatargetallocationforeachassetclassaswellasupperlowerbounds.Wealthmanagerswhouseaapproachmayassetclasstarget“ranges”ratherthanspecifictargetallocationpercentages.4.4PortfolioDiscretionaryAuthorityFulldiscretionmeansthatthewealthmanagerfreeimplementrebalancingtradesandreplacefundmanagerswithoutprior.4.4PortfolioSomewealthmanagersusea“time-based”rebalancingwherebyclientportfoliosrebalancedatacertainintervalregardlessthedifferencebetweencurrentassetclassweightsandtargetassetclassweights.Itmorecommonforwealthmanagersusea“threshold-based”rebalancingwherebythemanagerinitiatesrebalancingtradeswhenassetclassweightsdeviatetheirtargetweightsbyapre-specifiedpercentage.Therebalancingsectionalsosetsexpectationsforhowfrequentlythewealthmanagerreviewsaportfolioforpossiblerebalancingopportunities.4.4PortfolioChangesSectionindicatesWhetherunderwhatcircumstancestowhatdegreethewealthmanagerpermittedgooutsidethoserangeswhenexecutingatacticalchange.NotethatawealthmanagerwhousesonlyastrategicassetallocationapproachwouldnotincludethissectiontheIPS.4.4Portfolio4.ImplementationThissectionincludesinformationabouttheinvestmentvehiclesthewealthmanagerrecommendstoclients.third-partymoneymanagers⇒duediligenceprocess;frequency;quantitativescreensusedintheduediligenceprocess;qualitativecriteriathatinfluencethemanagerselectionandretentiondecisions;proprietaryinvestment;Thissectionindicateswhetherthewealthmanagerpreferstoinvestinmutualfunds,exchange-tradedfunds(ETFs),orindividualsecurities.Ageneraldiscussionoftheincrementalcostofusingthird-partymoneymanagersisrelevanthere.4.5ManagerDevelopinganappropriateassetallocationRecommendingorselectinginvestmentoptions,suchaspooledinvestmentvehiclesorindividualsecuritiesMonitoringtheassetallocationandrebalancingUsingderivatives,leverage,shortsales,andrepurchaseagreements(repos)MonitoringthecostsassociatedwithimplementingtheinvestmentstrategyMonitoringtheactivitiesthird-partyserviceproviders(e.g.,assetmanagersand/orcustodians)DraftingandmaintainingtheIPSReportingperformance,includinganindicationthecurrencyReportingtaxesandfinancialstatementsAssistingwiththepreparationagreementsassociatedwithfundofferings4.5ReviewThewealthmanagersetsexpectationsforhowfrequentlytheclientandwealthmanagertheIPS.Aspartimportantfortheclientaffirmthattheinvestmentobjectivesremainaccurate.Likewise,importantforthewealthmanagerconfirmthatthestrategyremainstomeetthoseobjectives.4.6ModeledBehaviorModeledportfoliobehaviordescribesarangeperformanceoutcomesoverholdingperiodsandcanmoretheclientthanmerelystatingthereturnobjectiveorthecompoundCapitalMarketExpectationsCapitalmarketexpectationsincludethewealthmanagermodeledportfoliostatistics—thatis,theexpectedreturnsandstandarddeviationsassetclasses,aswellasmodeledbetweenassetclasses.PortfolioConstructionApproachGoals-BasedInvestingApproachReportingReviewPortfolioReportingPortfolioReviewtheSuccessInvestmentProgramAchievementProcessConsistencyPortfolioPerformanceDefinitionsSuccess5.1PortfolioApproachConstructingportfoliosforclientsinvolvesseveralsteps:Identify.Thewealthmanageridentifiestheassetclassesthatmaybeappropriatefortheportfolio.Developmarketexpectations.Thewealthmanagerconsiderstheexpectedreturns,standarddeviations,andcorrelationsassetclassesrelationtheinvestmenthorizon.Determineportfolio.Wealthmanagerssometimesusemean–varianceoptimizationidentifypossibleportfolioallocationsthatmeetthereturnrequirementandrisktolerance.(Mean–varianceoptimization,MVO)5.1PortfolioApproachConstructingportfoliosforclientsinvolvesseveralsteps:Assessconstraints.Aswenotedearlierthereading,clientsoftenfacecertainconstraints.Implementtheportfolio.thisstage,thewealthmanagerfacesseveraldecisions.⇒activeorpassive;managerselection;factors(value,Size);individualsecuritiesorpooledvehicles;currencyhedging;Determinelocation.Whenaportfoliocomprisesmultipleaccounts,thewealthmanagermustdeterminewheretotheassetclassesandsecurities.5.1PortfolioGoals-BasedInvestingApproachThemanagerthenperformsmean–optimizationforeachgoalratherthanattheoverallportfoliolevel.portfoliosoptimizedeitherastatedmaximumleveloraspecifiedprobabilitysuccess.Anadvantagethegoals-basedinvestingapproachthatmaybeeasierforclientsexpresstheirrisktoleranceonagoal-specificratherthanattheoverallportfoliolevel.Adisadvantagethatthecombinationportfolioallocationsmaynotleadoptimalmean–varianceefficiencyfortheportfolio.ThefollowingstepsthesameasApproach：assetclasses,implementingtheportfolio,anddeterminingasset.5.2PortfolioPortfolioreportinginvolvesperiodicallyclientswithinformationtheirinvestmentportfolioperformance.Aportfolioallocationreport,whichallocationAperformancesummaryreportforperiodAdetailedperformancereport,whichincludeindividualsecurityperformanceAhistoricalperformancereportcoveringperiodsinceinceptionAcontributionwithdrawalreportforperiodAreportforperiodAreportdetailingfluctuations5.2PortfolioWealthmanagersoftenfaceaninherentbetweentheinvestmenthorizon,whichmaybedecadeslength,andthetypicalperformancehorizon,whichmaybeonecalendarquarteroroneWhengoals-basedinvestingused,portfolioreportingmayfocusontheprogresstowardagoalgoals)ratherthanonthe(oftenshort-term)performanceassetclassesorindividualsecurities.Benchmarkreportsanothercomponentportfolioreporting.Example-ReportingSimonforclientsinhisclientsonlyadetailedlistallintheirportfolio.listincludesacquisitionacquisitionforwellorlossonitsDiscussreportingpracticecanbemoreeffective.reportsnothisclientsdeterminetheirallocationorperformancetheiroverallportfolios.couldthisincludingaportfolioallocationreportaperformancereport.reportingdoesdetails,portfoliocontributions,withdrawals,allwhichcouldaportfoliosummaryreport.portfolioreportingincludingcommentartypicallyinaletteroremail.5.2Portfolioreviewsanopportunityforthewealthmanagertheinvestmentandreinforcetheappropriatenessthestrategy.Asparttheportfoliothewealthmanagertypicallyinquiresaboutchangestheobjectives,tolerance,ortimehorizon.Anothercommonaspectaportfolioacomparisonthethetarget.Thedifferencebetweenportfolioreportingandportfoliothatthewealthmanagermoreactivelyengagedareview.EvaluatingtheSuccessanInvestmentProgramAchievementAsuccessfulinvestmentprogramforaclientonethatachievesthegoals/objectiveswithacceptableamountrisk.Theclientshouldremainmeethisherlong-termobjectiveswithoutmeaningfuladjustmentstheplan.EvaluatingtheSuccessanInvestmentProgramThefollowingsomepointsthatwealthmanagersmayconsidersuccess:Ifthewealthmanagerselectsthird-partyfundmanagersimplementtheportfolio,howhavethemanagersperformedtheirownbenchmarks?Whenthewealthmanagerhasrecommendedfu