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Private Wealth Management: The Complete Reference for the Personal Financial Planner, Ninth Edition, 9th Edition by Jerry Rosenbloom, G. Victor Hallman

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9

Asset Allocation Strategies and Financial Management

Asset allocation is a system for determining what percentages of an investment portfolio should be in different asset classes and subclasses. The system is based on the expected after-tax total returns on various asset classes, their volatility, and their correlations. It is also affected by the investor’s financial situation, the time horizon involved, personal factors and investment constraints, the person’s investment objectives and policies, and the person’s ability to tolerate risk.

STEPS IN THE ASSET ALLOCATION PROCESS

The following are possible steps in this process:

   1.  Develop an investment policy statement.

   2.  Consider the investor’s personal situation, including investment ...

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