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Goal-based Investing

Author

Listed:
  • 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)

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.

Suggested Citation

  • Romain Deguest & Lionel Martellini & Vincent Milhau, 2021. "Goal-based Investing," Post-Print hal-03710225, HAL.
    • Handle: RePEc:hal:journl:hal-03710225
    DOI: 10.1142/12386
    as

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