Retirement Portfolios Workbook: Theory, Construction, and Management (Wiley Finance)

210 Pages·2010·1.3 MB·English

by  Michael J. Zwecher

Retirement Portfolios Workbook
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In Retirement Portfolios, leading retirement income expert Michael Zwecher provides
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fi nancial professionals with complete coverage of the most important issues in this h
fi eld—from creating portfolios that protect your client’s retirement and aspirations to e
maximizing the usefulness of retirement portfolios in your business. r
Now, with the Retirement Portfolios Workbook, he offers you a wealth of practical infor-
mation and exercises that will solidify your understanding of the tools and techniques R
found in the actual book. This comprehensive study guide—which parallels Retirement e
Portfolios chapter by chapter—contains carefully constructed problems with detailed t
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solutions, and offers invaluable insights into this discipline. r
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Page by page, this workbook: m
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• T ests your knowledge of the information addressed in Retirement Portfolios, before you
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put it to work in real-world situations
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• Helps you learn to solve problems while setting up tools you can use in practice Retirement
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• Provides chapter summaries and end-of-chapter questions to the main book
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• Puts the management of risks related to retirement portfolios in perspective
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If you intend on acquiring a fi rm understanding of creating and managing effective f
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retirement portfolios for your clients, this workbook has what you need to succeed.
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MICHAEL J. ZWECHER is a leading expert on retirement income. He has created guid- s Portfolios

ance, designed products, tools, and portfolio constructions that appeal to the fi nancial W
advisor community and their clients. Zwecher co-chairs the curriculum committee of
the Retirement Income Industry Association. He spent over ten years at Merrill Lynch, O
holding senior roles in risk management and wealth management, where he ran the In- R
vestment Management Strategic Solutions team in the Financial Products Group. Prior
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to Merrill, he was a consultant with Deloitte, an assistant professor at the Graduate
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School of Business Administration at Fordham University, and a visiting associate pro-
fessor at the University of Wisconsin–Madison. Zwecher holds a PhD in fi nance from O W O R K B O O K
the University of Wisconsin–Madison. O
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Cover Design: Loretta Leiva
Cover Photograph: © iStockphoto
$39.95 USA / $47.95 CAN
Theory, Construction, and Management
Michael J. Zwecher

Retirement
Portfolios
Workbook
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Retirement
Portfolios
Workbook
Theory, Construction, and Management
MICHAEL J. ZWECHER
John Wiley & Sons, Inc.
Copyright © 2010 by Michael J. Zwecher. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
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ISBN 978-0-470-55987-1
Printed in the United States of America.
10 9 8 7 6 5 4 3 2 1
Contents v
Contents
Preface ix
PART ONE
Questions
CHAPTER 1
Portfolio Focus and Stage of Life 3
CHAPTER 2
The Top-Down View:
A Short Primer on Economic Models of Retirement Income 9
CHAPTER 3
The Importance of Lifestyle Flooring 15
CHAPTER 4
Monetizing Mortality:
Annuities and Longevity Insurance 21
CHAPTER 5
Flooring with Capital Markets Products 25
CHAPTER 6
Building Retirement Income Portfolios 29
CHAPTER 7
Creating Allocations for Constructing Practical Portfolios by Age
and Lifestyle Needs 35
CHAPTER 8
Rebalancing Retirement Income Portfolios 43
CHAPTER 9
Active Risk Management for Retirement Income Portfolios 47
v
vi CONTENTS
CHAPTER 10
The Transition Phase 57
CHAPTER 11
Putting Together the Proposal 61
CHAPTER 12
Market Segmentation 63
CHAPTER 13
Products and Example Portfolios 65
CHAPTER 14
Preparing Your Client for a Retirement Income Portfolio 67
CHAPTER 15
Salvage Operations, Mistakes, and Fallacies 69
PART TWO
Solutions
CHAPTER 1
Portfolio Focus and Stage of Life 77
CHAPTER 2
The Top-Down View:
A Short Primer on Economic Models of Retirement Income 89
CHAPTER 3
The Importance of Lifestyle Flooring 99
CHAPTER 4
Monetizing Mortality:
Annuities and Longevity Insurance 109
CHAPTER 5
Flooring with Capital Markets Products 115
CHAPTER 6
Building Retirement Income Portfolios 121
CHAPTER 7
Creating Allocations for Constructing Practical Portfolios by Age
and Lifestyle Needs 129
Contents vii
CHAPTER 8
Rebalancing Retirement Income Portfolios 141
CHAPTER 9
Active Risk Management for Retirement Income Portfolios 149
CHAPTER 10
The Transition Phase 159
CHAPTER 11
Putting Together the Proposal 163
CHAPTER 12
Market Segmentation 165
CHAPTER 13
Products and Example Portfolios 167
CHAPTER 14
Preparing Your Client for a Retirement Income Portfolio 171
CHAPTER 15
Salvage Operations, Mistakes, and Fallacies 177