Private Banking and Investment Group at Merrill Lynch

Gain insights that can help inform sound decisions

Our clients are accustomed to working with experts and advisors in formulating sound investment strategies, and welcome opportunities to broaden their awareness of innovative ideas to address their private wealth issues. With this in mind, the Private Banking and Investment Group at Merrill Lynch authors a series of Whitepapers in collaboration with some of the most respected and renowned experts in the areas affecting families with substantial assets. This series is intended to encourage meaningful conversation with your Private Wealth Advisory team about topics most important to you and your family.

To make smart choices, global investors need to grasp the complex and shifting connections across economies and sectors

I n search of international diversification, a U.S. investor buys French stocks, a Japanese index fund and some German bonds. Her money may now be spread across the map—but is she truly reaping the rewards of a global economy? Not if the best opportunities lie hidden in the Indian housing market, the untapped enthusiasm of Vietnamese entrepreneurs or the rapid growth in Brazilian infrastructure. The belief that merely investing in international equities will provide adequate diversification and growth may no longer be true—if it ever was. In today’s increasingly accessible world, with its ever more complex web of connections, sophisticated investors can no longer achieve international diversification simply by investing in BRIC (Brazil, Russia, India, China) funds or baskets of Asian or Latin American stocks. Truly international investors seek out the best equity, bond or alternative investment opportunities on a case-by-case basis, whether they’re found in Baltimore, Bangkok or Brussels. Click here to read the full paper.

To receive a copy of any of the Whitepapers below, please e-mail pbig@ml.com

Investors are using social values to guide investment choices. Today’s newest options offer an opportunity to do good, while doing well.

The line that has separated the building of wealth from accomplishing social goals has been one of the most enduring features of capitalism. The industrialists of the Gilded Age amassed fortunes in manufacturing, railroads and banking, and only then did they turn their attention to erecting the museums, symphony halls and philanthropies that bear their names. As the markets grew during the 20th century, socially minded investments were, as Fortune magazine put it, nothing more than “feel good” investments. Click here to read the full paper.

On a typical weekday morning in the bustling streets of Mumbai and Bangalore, and several other big cities in India, the scene is much as it in in the major capitals of the Western world: sharply dressed men and women chatter on cells phones and tap at their PDAs as they rush off to work. All around them is the booming noise of construction as shiny new office towers rise. The streets are filled with cars — more and more Luxury models from Europe and Asia — and the malls are full of casual shoppers. Welcome to India at the dawn of the 21st Century.

As more and more people use the Internet for just about everything from shopping to banking, personal information is fast becoming the world's most precious resource. "It's the currency of the 21st century, and the information of affluent Americans is worth quite a bit," says Ron Teixeria, Executive Director of National Cyber Security Alliance.

You've carefully planned your estate to leave as few loose ends as possible. You've chosen an array of trust funds and tax — friendly investment tools designed to protect the wealth you've built for decades — if not generations — to come. Your will is airtight. Yet for all of your planning, there's one looming question: Are your heirs prepared to take on the challenge of managing and protecting the wealth they will inherit?

In sharp contrast to the recommendations of Modern Portfolio Theory, a vast majority of investors are not well diversified. This neglect of diversification is seen across all wealth segments, including the affluent. This paper attempts to provide a solution to this "diversification paradox," by expanding the Markowitz Framework of diversifying market risk to also include the concepts of Personal Risk and Aspirational Goals.

All too often, we hear of wealthy individuals who have not left a complete and sophisticated will and estate plan to achieve the families' needs and desires. While this is surprising, the struggle an individual faces in understanding and implementing an estate plan is not. It is a challenge to adapt traditional legal documents to a family's unique characteristics. A variety of factors must be considered in an estate plan, ranging from unusual assets, federal and state taxes, credit, and legal liabilities to an ever-widening array of family members, all with different talents and interests, and some with businesses and investments of their own. How will an estate plan respond when tax laws or your children's and grandchildren's circumstances keep changing in the future?

"I want to leave my children enough that they can do almost anything, but not so much that they do nothing." That's how financier Warren Buffett summed up the dilemma facing today's wealthy families. Even for the "Oracle of Omaha," celebrated for his uncanny timing and flawless financial judgment, the question of how much to leave children—when, how and in what form—is far from a simple mathematical formula. As most parents will attest, wealth is only as valuable as the opportunity and fulfillment it affords children, grandchildren and future generations.

Harvard Senior Philanthropic Adviser Charles Collier isn't a big fan of "affluenza" as a label. "It appears to be a term in play in America to describe the negative aspects of money on children, including dependence and a lack of motivation," he says. "But I don't think it's very instructive or useful." Collier argues that "affluenza" focuses only on the negative aspects of money and is a term used more often by the media than by wealthy families. True, children can sometimes become unmotivated and overly defined by family wealth, but assigning a "diagnosis" does little to help the family in trouble. "It's not a disease," he says. Rather, wealth simply adds another dimension to the already complex challenge of raising healthy, happy, motivated and emotionally balanced children.

To receive a copy of any of these Whitepapers, please e-mail
pbig@ml.com.