Tailored Wealth Management (eBook)

Niall is a Private Wealth Advisor to ultra-high-net-worth investors and lead member of the Gannon Group.  He has been recognized as one of the nation’s top 100 Financial Advisors by Barron’s and Registered Rep.   He is author of Investing Strategies for the High Net-Worth Investor: Maximize Returns on Taxable Portfolios (McGraw-Hill, 2009).  In 2018 he published The Efficient Valuation Hypothesis in Seeking Alpha.  Niall has appeared on CNBC & National Public Radio and been quoted in the New York Times, Wall Street Journal, and Barron’s.  His research has been featured or quoted in ten books and academic articles by other authors. Niall has addressed the CFA Institute, Institute for Private Investors, Portfolio Management Institute, Family Office Exchange and Tiger 21. Niall is affiliated through various roles with the Institute for Private Investors, CFA® Institute Committee for Investment Policy, The Papal Foundation, Roman Catholic Foundation and Cor Jesu Academy. He co-founded the Rev. James Kisero Children’s clinic in the village of Bolo, Kenya.  He is a past board member of Junior Achievement, Connections to Success, St. Louis Variety, St. Louis Irish Arts and the Annual Catholic Appeal. Niall received the Silver Congressional Award, President’s Volunteer Service Award, alumnus of the year at The Citadel School of Business, PMI Portfolio Manager of the Year Award, and is a member of The Order of St. Louis the King.  He is a graduate of The Citadel and served in the US Army Reserve as an M1-Abrams tank platoon commander.

Dedication 5
Acknowledgments 6
Contents 8
List of Figures 10
List of Tables 11
List of Exhibits 12
Part I: The Landscape of Wealth Around the World 13
1: Introduction 14
2: Average Americans: Stories of “Ordinary” Success 17
The Cause, the Money Habit the Effect, a Nest Egg
The Cause, Downsizing, and Reprioritizing the Effect, Quitting Debt, and the Rat Race
The Cause, Frugality and Investing Wisely the Effect, the Joy of Giving
The Cause, Modest Expectations the Effect, Living Life to Its Fullest
The Cause, Total Commitment and Hard Work the Effect, Reaching Your Goal
How “Ordinary” Becomes Extraordinary 24
3: Wealth: How Much Do You Need How Much Is Enough
Real People Real Measures of Wealth
Relative Definitions of Wealth 29
Wealth and Happiness 31
4: The Growth of American Wealth: Its Impact on the Average Household Compared with the Forbes 400 33
Dynamics Behind the Growth in Wealth 36
5: The Six Robbers of Wealth and How to Avoid Them 43
Wealth Robber # 1: Late Starts 43
Wealth Robber # 2: Spending and Small Indulgences 44
Wealth Robber # 3: Mistakes 45
Wealth Robber # 4: Taxes 49
Wealth Robber #5: Inflation 50
Wealth Robber # 6: Fees 51
Investor Beware 52
6: The Wealth Lifecycle: From Building It to Passing It On 53
Stage 1: Youth 54
Stage 2: Young Adult 55
Stage 3: The Middle Years 56
Stage 4: Late Middle Age 56
Stage 5: Final Decade before Retirement 57
Stage 5: Parenthood 58
Stage Six: Twilight Years 59
Part II: Technical Aspects of Tailored Wealth Management 62
7: The Efficient Valuation Hypothesis: The Long View 63
Forecasting Long-Term Portfolio Returns: The Efficient Valuation Hypothesis 64
Hypothesis 65
Method Description 65
Time Period 66
Annualized Returns 66
P/E 66
Earnings Yield 66
Return: EY 66
Results 68
Conclusions 69
References 70
8: Asset Allocation: Choices and Challenges 71
Allocation Alone Is Not the Answer: Quality Counts 72
Asset Allocation by Type of Investor 74
Family Office and College Endowment Investors 74
Individual Investors 75
Do-It-Yourself Asset Allocation 75
Copycat Investors 77
Balanced Mutual Fund Investors 78
The Investment Consultant as Asset Allocator 79
Dual-Role Asset Allocator and Manager 79
Deciding How to Invest: Do-It-Yourself versus Funds versus Financial Advisor 80
9: Defining Moment: Your Objectives, Assumptions, and Other Factors Affecting Long-Term Returns 83
Impact of Taxes on Portfolio Returns 87
Strategies to Enhance Returns 89
Factors to Consider 90
Different Strokes for Different Goals 91
The Role of Long-Term Assumptions on Objectives 91
The Impact of Your Time Horizon on Your Investment Strategy 94
What to Do When All Your Eggs Are in One Basket 96
10: Taxation at the Top: Its Long-Term Effect on the Assets 99
The Income Tax: An Historical Perspective 100
Adjusting Your Portfolio to Suit the Income Tax Times 104
Adjusting Your Portfolio to Suit the Capital Gains Tax Times 105
Adjusting Your Portfolio to Suit the Estate Tax Times 108
Adjusting Your Portfolio to Suit the Gift Tax Times 113
Conclusions 115
11: Portfolio Optimization: The Impact of Taxation, Turnover, and Time Horizon on Net Returns 116
Effect of a High Tax Bracket on After-Tax Returns on Stocks 1957 to 2017 117
Impact of State of Residence on After-Tax Returns 122
Impact of High Turnover Rates on Gross Returns 122
The Role of Time Horizon as a Predictor of Investment Results 123
The Role of Time Horizon on Decision to Liquidate a Portfolio 126
After-Tax Impact on the Decision to Invest in Bonds versus Equities 126
12: Building Your Investment Team 131
Deciding How to Invest: Do-It-Yourself versus Fund Manager versus Financial Advisor 131
Do-It-Yourself Investor 131
Fund Manager 132
Financial Advisor 133
How to Select a Financial Advisor 133
Types of Financial Advisors 134
Additional Skills to Look for in a Financial Advisor 136
How to Select the Other Teammates 136
Family Attorney 137
What to Look for in a Family Office Executive 138
What to Look for in a CPA 139
What to Look for in an Executive Director of a Family Foundation or Donor-Advised Fund 140
What to Look for in an Insurance Broker and Agent 141
What to Look for in a Philanthropy Manager and Other À la Carte Professionals 142
The Last Step in the Selection Process 142
13: Educational Resources for Investors 143
The Value of a Great Book 143
Targeted Reports Provide Unique Perspectives 145
Peer Groups Broaden Horizons 146
Conclusion 149
Part III: Successful Spending, Philanthropy, Gifting and Estate Planning 150
14: Spending: How Much Is Too Much? 151
To Spend or Not to Spend 153
Decisions: When to Spend It, What to Spend It On 154
The Joy of Spending 156
When Spending Goes Wrong 158
Conclusion 158
15: Philanthropy: What You Need to Know to Donate Wisely 159
Donations to Religious Organizations 160
Donations to Other Organizations 161
Enlightened Giving 162
The Joy of Giving 163
The Value of Giving 164
Tailored Philanthropy for the Wealthy Family 165
Protect Yourself from Giving Going Awry 166
Focus of Giving: Determining Your Purpose 167
Altruistic Giving Through Non-Traditional Channels 168
A Word of Warning 169
The “Given Pledge”: How You Can Give Like a Billionaire 170
Tell Your Family 173
16: Gifting and Estate Planning: Determining the Right Time to Transfer Wealth 174
The Mathematics of Giving 176
Giving Now versus Giving Later 177
Pros and Cons of Different Trusts 177
Pros and Cons of a Simple Wealth Transfer 179
Choosing an Estate Plan That Fits Your Values 179
Maintaining Your Estate Plan 180
Before You Start, Make Sure You’re Clear 181
17: Epilogue 182
Index 183