PT - JOURNAL ARTICLE AU - Hungjen Wang AU - Anil Suri AU - David Laster AU - Himanshu Almadi TI - Portfolio Selection in Goals-Based Wealth<br/>Management AID - 10.3905/jwm.2011.14.1.055 DP - 2011 Apr 30 TA - The Journal of Wealth Management PG - 55--65 VI - 14 IP - 1 4099 - https://pm-research.com/content/14/1/55.short 4100 - https://pm-research.com/content/14/1/55.full AB - The authors propose an incremental step toward combining the insights of modern portfolio theory with some of the propensities documented in the literature on behavioral finance. They develop a goals-based wealth management approach that finds a specific subportfolio to address each of an investor’s goals and then derive the least-cost solution. They relate the closed-form solution for the one-period, two-asset problem to the mean–variance efficient frontier. Consistent with the “lockbox separation”concept proposed by Sharpe, they demonstrate that a multiperiod goal, such as a retirement plan, can be viewed as a collection of single-period problems. Next, they extend their result to a market with many assets, where portfolios are exogenously given. Finally, they illustrate the approach with a case study with multiple asset classes and multiperiod goals.TOPICS: Portfolio theory, in wealth management