TABLE OF CONTENTS Since the 1990s, in the Group of Ten (G10) countries, there has been a trend towards the institutionalization of fund management, including asset selection for risk and return optimization, and administration of wealth. This is what private banking and asset management are all about, both terms identifying a process of outsourcing the administration of wealth, albeit with reference to different populations of investors. (The concept of outsourcing and some of its functions are discussed in Chapter 7.)
This evolution in the management of one's fortune is characterized by the notion that professionals in the investment business can offer, to a diverse range of investors, wealth management practical capabilities better than each investor can provide for himself. Many of the insourcers of wealth management focus on price/value, exploiting periodic discrepancies between an investment's:
Market values, and
Intrinsic value (see section 5.7).
Because the experts are supposed to know better, companies outsource asset management to specialized firms or do it in-house in a separate business unit. This is the policy practised by many insurance companies in the UK. Besides managing their parent institution's wealth, asset management divisions or subsidiaries aim at becoming leading wealth administrators and mutual fund providers. They do so by offering a broad range of services and products:
To institutional clients across the world, and
To high...
