Table Of ContentExploring the Cause and Effect
of Financial Success
Niall J. Gannon
Tailored Wealth Management
Niall J. Gannon
Tailored Wealth
Management
Exploring the Cause and Effect
of Financial Success
Niall J. Gannon
The Gannon Group
St. Louis, MO, USA
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ISBN 978-3-319-99779-7 ISBN 978-3-319-99780-3 (eBook)
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For Riley and Fiona
Acknowledgments
I offer gratitude to my editor, Tula Weis at Palgrave Macmillan, for believing
in this project two years ago and for having the vision to help see it through.
I am grateful to my developmental editor, Ellen Coleman, for not only com-
pleting her task with skill but also bringing new perspective to my views on
the central topics of the book.
Thank you to the families whom I have come to know and serve over the
past 25 years for believing in me and offering a classy example of how to lead
a well-lived life.
Thank you to my wife, Gretchen, and my two daughters, Riley and Fiona,
for enduring my loud and aggressive typing style that echoed through our
home on many a day and night over the past year.
I remain grateful to Pat Kearns for offering me an internship at Shearson
Lehman Brothers in 1991 that has led to such a fulfilling career. Thanks to Mark
Bebensee from The Citadel and the late Sister Agnes Catherine Williams, OSU.
Thank you to colleagues and members of the CFA Institute for providing
peer review on the Efficient Valuation Hypothesis, especially Brett Neubert,
CFA. Overwhelming thanks to Scott Seibert, CFA, who co-authored the
Efficient Valuation Hypothesis whitepaper and agreed to update valuation
formulas, graphs, and tables for inclusion in this work. Thank you to the edi-
tors at Seeking Alpha, especially Mark Pentacoff, for highlighting our paper
and agreeing to start a new debate in the financial services industry about the
driver of portfolio returns over time.
Thanks to Charlotte Beyer, founder of the Institute for Private Investors
and author of Wealth Management Unwrapped (Wiley, 2nd edition, 2017), for
being so insistent that I continue to research ways to improve private investor
outcomes.
vii
viii Acknowledgments
Thank you to Dr. Aswath Damodaran, finance professor at New York
University, for making his historical models available in an open-sourced for-
mat upon which we built our models.
Thank you to Charlie Henneman of the CFA Institute, whose invitation to
address the delegates of the 2008 CFA Annual Conference led to my first
book, and the models and refinements that grew from it.
Thank you to the members of Tiger 21, the Family Office Exchange, the
Institute for Private Investors, Campden Wealth, and the Portfolio
Management Institute for allowing me to share my work with their members.
Thank you to His Holiness, Pope Francis, for helping me understand and act
on ways to improve the human condition in the poorest parts of the world.
I maintain the ultimate level of respect and gratitude to Matt Rogers, Sarah
Govreau, and Cindy Feaster for their dedication to the wealth management
and family office profession.
Contents
Part I The Landscape of Wealth Around the World 1
1 Introduction 3
2 Average Americans: Stories of “Ordinary” Success 7
3 Wealth: How Much Do You Need; How Much Is Enough 17
4 The Growth of American Wealth: Its Impact on the Average
Household Compared with the Forbes 400 25
5 The Six Robbers of Wealth and How to Avoid Them 35
6 The Wealth Lifecycle: From Building It to Passing It On 45
Part II T echnical Aspects of Tailored Wealth Management 55
7 The Efficient Valuation Hypothesis: The Long View 57
8 Asset Allocation: Choices and Challenges 65
9 Defining Moment: Your Objectives, Assumptions, and Other
Factors Affecting Long-Term Returns 77
10 Taxation at the Top: Its Long-Term Effect on the Assets 93
ix
x Contents
11 Portfolio Optimization: The Impact of Taxation, Turnover,
and Time Horizon on Net Returns 111
12 Building Your Investment Team 127
13 Educational Resources for Investors 139
Part III Successful Spending, Philanthropy, Gifting and Estate
Planning 147
14 Spending: How Much Is Too Much? 149
15 Philanthropy: What You Need to Know to Donate Wisely 157
16 Gifting and Estate Planning: Determining the Right Time
to Transfer Wealth 173
17 Epilogue 181
Index 183
List of Figures
Fig. 10.1 Top marginal tax bracket 96
Fig. 10.2 Top capital gains tax bracket 100
Fig. 10.3 Estate tax rates 103
Fig. 10.4 Historical estate tax rates versus dollar amounts 104
Fig. 10.5 Gift tax rates 107
Fig. 10.6 Historical gift tax rates versus dollar amounts 108
Fig. 11.1 Growth of $100 (1957–2017) 124
Fig. 15.1 Donor type in billions 158
Fig. 15.2 Donation beneficiaries 159
xi
