Goal-based Investing

Romain Deguest, Lionel Martellini and Vincent Milhau
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Romain Deguest: LEM - Lille économie management - UMR 9221 - UA - Université d'Artois - UCL - Université catholique de Lille - Université de Lille - CNRS - Centre National de la Recherche Scientifique
Lionel Martellini: EDHEC - EDHEC Business School - UCL - Université catholique de Lille
Vincent Milhau: EDHEC - EDHEC Business School - UCL - Université catholique de Lille

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Abstract: Goal-based investing is a new paradigm that is expected to have a profound and long-lasting impact on the wealth management industry. This book presents the concept in detail and introduces a general operational framework that can be used by financial advisors to help individual investors optimally allocate their wealth by identifying performance-seeking assets and hedging assets. Grounded in the principles of asset pricing and portfolio optimisation, the goal-based investing approach leads to the design of investment solutions that truly respond to investors' problems, which can most often be summarized as follows: secure essential goals with the highest confidence level and maximize the chances to reach aspirational goals. A series of case studies guides the reader through the implementation of goal-based investing, illustrates the efficiency of this paradigm and explains how one can accommodate a variety of implementation features such as taxes, short-sales constraints, parameter estimation risk, as well as limited customisation.

Date: 2021-07-28
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Published in World Scientific, pp.324, 2021, 978-981-124-094-2. ⟨10.1142/12386⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03710225

DOI: 10.1142/12386

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