The Stewardship of Wealth: Successful Private Wealth Management for Investors and Their Advisors, + Website

Part Three

The Rich Get Richer

The Nuts and Bolts of Successful Investing

Assuming they start with roughly equal talent, great football teams are great because their strategies are better than those of other good football teams—their vision of the game is superior. But football teams have to be good before they can be great, and being good means mastering the rudiments of the game—the blocking and tackling without which even the greatest game plans cannot be carried out.

And so it is with managing a substantial investment portfolio. Whether a family's investment activities turn out to be great or not will depend on many factors, including the level of talent and vision the family can deploy. But every family can—and must—be good at the task. And being good means mastering the rudiments of the game—the nuts and bolts of the investment process.

Mastery in this sense doesn't mean mastery at a professional level. I don't expect that many families will read Part Three and promptly go into the business of advising wealthy families on their investment portfolios. But families need to master the nuts and bolts sufficiently to know when they are being competently advised; to ask the key questions; to carry out, in other words, their stewardship duties.

Part Three begins at the beginning—with the question of how taxable investment portfolios are designed—and proceeds through the various steps in the investment process roughly in order:

• Designing taxable investment portfolios.
• Adding value ...