RT Journal Article
SR Electronic
T1 Asset Allocation Recommen-dations of Financial Advisors
JF The Journal of Wealth Management
FD Institutional Investor Journals
SP 21
OP 33
DO 10.3905/jwm.2003.320480
VO 6
IS 2
A1 Claus Huber
A1 Helmut Kaiser
YR 2003
UL https://pm-research.com/content/6/2/21.abstract
AB The authors observe that banks and financial advisors make recommendations for the asset allocation of individual investors. Determinants are the individual's stage of life, his/her risk tolerance and investment goals, as well as his/her liquidity needs. These recommendations are usually based on a heuristic approach. Modern Portfolio Theory, in contrast, postulates the optimization of a portfolio's return in consideration of its risk. The authors focus on determining the risk/return characteristics of the asset allocation recommendations for five asset classes (equities, bonds, real estate, hedge funds, cash) and compare them with risk-optimized portfolios. Their goal is to find out whether these are the best possible recommendations in terms of risk and return. They conclude that the recommendations of the financial advisors are not too far away from the efficient frontier.