Overview: Investment Counseling for Private Clients

Abstract

The enormous wealth created by a robust U.S. economy, technological advances, and the almost 300 percent increase in U.S. stock market indexes during the 1990s combined with demographic trends have made the management of taxable accounts for private clients one of the highest-growing business segments in investment counseling. Investment management organizations recognize the tremendous opportunity to increase fee income by attracting private clients; they also recognize that this client segment presents the greatest challenges for investment managers. Tax, legal, and client constraints must be taken into account when developing investment policies and portfolio strategies for taxable clients. Managers must also integrate tax and estate planning with the investment strategy and must often work with other professionals to accomplish client goals. Unlike accounts for institutional investors, taxable-private-client accounts are often composed of different generations—each with its own objectives. Thus, asset...