Life insurance protects an individual's beneficiaries against a loss of income. Pricing a life insurance policy is a time value of money issue that takes some practice to get the handle on. Insurance companies use the law of large numbers…

Life Insurance Life insurance is designed to make a payout to beneficiaries after the death of a primary income earner. When beneficiaries are financially dependent on the earnings of the insured, this creates a risk to them of being left…

Typical Individual Risks Earnings Risk: Refers to loss of Human Capital. Certain professions are inherently riskier than others. Earnings risk can refer to either a complete loss of earnings or a diminution of earnings. Premature Death Risk: Occurs when the…

Economic (Holistic) Balance Sheet An economic balance sheet builds on the idea of a traditional balance sheet that many readers are likely already well acquainted with. The economic balance sheet pertains to individuals and families and goes beyond physical assets…

The following segment gives a brief overview of the various economic stages of life a wealth management client will pass through. Wealth managers who have been in business for many years will have a feel for these stages of life…

$$ \text{Net wealth} = \text{Total Wealth} – \text{Liabilities.} $$ This can be thought of as similar to the fundamental accounting equation, in that: $$ \text{Equity} = \text{Assets} – \text{Liabilities} $$ Only in this case, the fundamental accounting equation pertains to…

Insurance is a risk transfer mechanism. It is said to reduce the total wealth of the insured, which makes sense, as it represents a kind of amortized payment schedule of the present value of a predetermined risk event. Some risks…

Reading 7: Overview of Private Wealth Management Los 7 a: Contrast private client and institutional client investment concerns Los 7 b: Discuss information needed in advising private clients Los 7 c: Identify tax considerations affecting a private client's investments Los…

Various tools exist for the mitigation of wealth transfer taxes. Common tools include: Trusts. Foundations. Life insurance. Companies. This reading will focus on trusts, the various types of trusts commonly used, and their benefits concerning estate planning. Trusts A trust…

An estate refers to all the property a person owns or controls. The property in one's estate may consist of financial assets (bank accounts, stocks, bonds, or business interests), tangible personal assets (artwork, collectibles, or vehicles), immovable property (residential real…