TY - JOUR T1 - The Influence of a Family Business<br/>on Portfolio Management: <em>An Asset-Liability Management Approach</em> JF - The Journal of Wealth Management SP - 14 LP - 30 DO - 10.3905/jwm.2014.17.1.014 VL - 17 IS - 1 AU - Stephen M. Horan AU - Robert R. Johnson Y1 - 2014/04/30 UR - https://pm-research.com/content/17/1/14.abstract N2 - Human capital represents a large proportion of the assets on almost all investors’ life balance sheets and varies considerably in magnitude and character, which we show profoundly influences optimal asset allocation of a family’s financial assets. Using an asset-liability management framework, we demonstrate through the example of an ultra-high net worth family with a large operating company that the magnitude of the family’s investment goals in relation to their assets is a critical determinant of risk tolerance. For investors with substantial discretionary wealth, changes in asset valuations and investment priorities imply very large changes in optimal asset allocation, which are sometimes counterintuitive and further amplified when an illiquid operating company represents the bulk of a family’s assets.TOPICS: Wealth management, portfolio construction, risk management ER -