MANAGING INDIVIDUAL INVESTOR PORTFOLIOS
James W. Bronson, CFA
Northern Trust Bank
Newport Beach, California
Matthew H. Scanlan, CFA
Barclays Global Investors
San Francisco, California
Jan R. Squires, CFA
CFA Institute
Charlottesville, Virginia
Contents
LEARNING OUTCOME STATEMENTS................................................................................................................2
1 INTRODUCTION.............................................................................................................................................2
2 CASE STUDY ...................................................................................................................................................3
2.1 THE INGER FAMILY ....................................................................................................................................3
2.2 INGER FAMILY DATA .................................................................................................................................4
2.3 JOURDAN’S FINDINGS AND PERSONAL OBSERVATIONS...............................................................................5
3 INVESTOR CHARACTERISTICS .................................................................................................................6
3.1 SITUATIONAL PROFILING ............................................................................................................................7
3.2 PSYCHOLOGICAL PROFILING .....................................................................................................................10
4 INVESTMENT POLICY STATEMENT ......................................................................................................16
4.1 SETTING RETURN AND RISK OBJECTIVES..................................................................................................16
4.2 CONSTRAINTS...........................................................................................................................................20
4.2.1 Liquidity..............................................................................................................................................20
4.2.2 Time Horizon ......................................................................................................................................22
4.2.3 Taxes...................................................................................................................................................23
4.2.4 Legal and Regulatory Environment .....................................................................................................27
4.2.5 Unique Circumstances........................................................................................................................29
4.2.6 Peter and Hilda Inger’s Investment Policy Statement .........................................................................30
5 AN INTRODUCTION TO ASSET ALLOCATION.....................................................................................32
5.1 ASSET ALLOCATION CONCEPTS ................................................................................................................32
5.2 MONTE CARLO SIMULATION IN PERSONAL RETIREMENT PLANNING ........................................................39
6 SUMMARY .....................................................................................................................................................43