Wealth Management: Private Banking, Investment Decisions, and Structured Financial Products

Wealth Management has two themes: Private Banking and investment decisions regarding Structural Financial Products. Dr. Dimitris Chorafas examines in a rigorous way whether structured financial products are advisable investments for retail and institutional investors and, if yes, which risks they entail. As our society becomes increasingly affluent, and state-supported pension schemes find it difficult to survive, a growing number of high net-worth individuals, and families, have become retail investors - looking for ways and means to optimize wealth management, and Private Banking deals with these sorts of clients. Private banking also deals with clients that are institutional investors, such as pension funds, mutual funds, and insurance companies, as well as not-for-profits, foundations and companies explicitly set up for wealth management. Both institutional and retail investors are being offered by the banks they work with structured products. Typically, these are securities that provide them with a redemption amount, with may be either with full or partial capital protection, and some type of return. The book examines structured financial products, their polyvalent nature, and the results which could be expected from them.

Return on structural instruments, which are essentially derivatives, is paid in function of a specific investment strategy on selected underlying asset(s). This essentially means on the performance of the underlyings, obtained by asset managers, which may be banks or hedge funds, through purchase or sale of embedded options. But there are risks. Both risk and return from structured products are related to three main issues: the volatility of future value of an underlying, the uncertainty of future events, and the exposure of the product. Every type of investment is subject to market forces, and the more leveraged a portfolio is, the greater will probably be both the assumed risk and the expected reward. The fact that structured financial products appeal, or at least are being marketed, to both retail investors and institutional investors makes the dual approach deliberately chosen in this book most advisable. This book addresses all these issues in a practical manner with numerous case studies and real-world examples drawn from the author’s intensive research.

Because it is based on intensive research, the book is rich in practical examples and case studiesAddresses the growing trend towards the use of structured financial instruments in private bankingThorough treatment of structured financial products that keeps maths to a minimum

Part One Private Banking 1. Private Banking Defined 2. Know Your Customer And His/Her Profile 3. Business Opportunity: Fees And Commissions From Private Banking 4. Risk And Return With Investments

Part Two Asset Management 5. Asset Management Defined 6. Business Models For Asset Manangement 7. Outsourcing And Insourcing Assets Management 8. Trust Duties And Legal Risk

Part Three Derivative Financial Instruments, Structured Products, And Risk Control 9. Derivative Financial Instruments Defined 10. Structured Financial Products 11. Controlling The Risk Taken With Structured Products

Part Four Case Studies With Three Main Classes Of Structured Products 12. Fixed Income Structured Products 13. Practical Examples With Fixed Income Derivatives 14. Equity-Type Structured Products 15. Practical Examples With Equity Type Derivatives 16. Currency Exchange Structured Products