45-827 WEALTH MANAGMENT
6 units, Carnegie Mellon University
The course examines wealth management over the lifecycle by individuals and families as well as the role of intermediaries. We begin by applying basic concepts and tools from finance portfolio theory and equilibrium analysis. Lifetime portfolio choice in perfect markets provides a benchmark for evaluating how taxes alter traditional conclusions about savings and asset allocation. We address risk aversion and diversification as well as the ramifications of market efficiency, equilibrium analysis and the absence of arbitrage, along with the impact of labor income and concentrated family wealth. We highlight the role and significance of borrowing and effective use of mortgage finance. We examine the impact of taxes on aftertax returns and wealth, and the structure of tax clienteles on both holdings and returns. Effective tax management is crucial to obtaining favorable outcomes when capital gains taxes are triggered by sale. We examine harvesting vs. deferral of capital gains and losses, valuing lockedin positions, management of wash sales, portfolio rebalancing, and the composition of risky portfolios such as concentrated portfolios with capital gains taxes. We discuss and contrast various investing products, including mutual funds, exchangetraded funds and customized investment vehicles. The comanagement of taxable and taxdeferred retirement funds, the use and investment of Roth and traditional taxdeferred funds, and within these accounts, targetdate funds and retirement plan defaults, all play an important role in financial planning. We will explore charitable gifting e.g., when and what to gift and the potential role of donoradvised funds and philanthropic funds and estate planning strategies, including such issues as family businesses, asset titling, and the integration of estate and income taxes. We apply our framework to a range of concrete examples and illustrative cases.
Prerequisites: none listed
Offered: Spring 2027
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