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Copyright © 2015 by Wesley R. Gray, PhD, Jack R. Vogel, PhD, and David P. Foulke. All rights reserved.
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Published simultaneously in Canada.
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Library of Congress Cataloging-in-Publication Data
Gray, Wesley R.
DIY financial advisor: a simple solution to build and protect your wealth / Wesley R. Gray, PhD, Jack R. Vogel, PhD, and David P. Foulke.
pages cm. – (Wiley finance series)
Includes index.
ISBN 978-1-119-07150-1 (cloth) – ISBN 978-1-119-12491-7 (epdf) – ISBN 978-1-119-12490-0 (epub)
1. Portfolio management. 2. Families–Economic aspects. 3. Wealth–Management. 4. Investment advisors. I. Vogel, Jack R., 1983- II. Foulke, David P., 1966- III. Title.
HG4529.5.G736 2015
332.024–dc23
2015013795
Cover Design: Wiley
Cover Images: Investment charts with laptop © Nonwarit/Shutterstock;
Market graph, dollars and calculator © iStock.com/Niyazz
This book is a synopsis of our research findings developed while serving as a consultant and asset manager for large family offices. By way of background, a family office is a company, or group of people, who manage the wealth a family has gained over generations. The term family office has an element of cachet, and even mystique, because it is usually associated with the mega-wealthy. However, practically speaking, virtually any family that manages its investments – independent of the size of the investment pool – could be considered a family office. The difference is mainly semantic. For example, the term individual investor is often a reference to the head of a household who manages a family's assets. This “individual investor” is a de facto family office – no matter whether this individual investor manages a $10,000 portfolio or a $5,000,000,000 portfolio. The goal is the same as for even the largest family office.
There are benefits and costs to being a family office. The key advantage a family office or, by extension, any individual investor, has over so-called “institutional” investors, is the ability to make long-term investment decisions that maximize after-tax, after-fee risk-adjusted performance, without fear of a misalignment of incentives – those who own the money are the best stewards of the money. By contrast, a professional institutional investor, or “hired gun,” is crippled by a misalignment between the incentives of the owners of capital and those of the investment manager, who has a separate incentive to keep his job, which can create a shorter-term perspective that can conflict with a long-term perspective. The decision that maximizes the after-fee, after-tax, risk-adjusted returns on capital, while optimal for the owner of capital, is not always the optimal decision for a third-party investment manager.
