Rosenfield, 55, is an economist with a law degree from the University of Chicago, where he still serves as a senior lecturer. He and two University of Chicago professors started an economic consulting business called Lexecon Inc., which he ran for 22 years. It's now a wholly-owned subsidiary of FTI Consulting Inc. He also was CEO of UNext Inc., an education company he launched in 1997 that provided online business courses to corporate customers. The company's high-profile connections included seed money from financier Michael Milken's Knowledge Universe organization, as well as a roster of heavyweight academic partners that included Carnegie Mellon, Columbia, Stanford, the University of Chicago and the London School of Economics and Political Science. The company currently operates under the name Cardean Learning Group.  

Rosenfield later was working with an investment banking team that came to Guggenheim Partners, and that's how his Guggenheim association began. "This is very interesting work," he says. "It's very much like Lexecon in that we have some of the smartest people in the world-people like Danny and Gary Becker-helping us think through a way to do something differently." Becker, a University of Chicago professor who won the Nobel Prize in economics in 1992, is a member of Guggenheim's academic advisory board. The board, which also includes Kahneman, provides advice to both the wealth management unit and the overall company.  

About five years ago, Rosenfield was at a conference where Kahneman and Becker sat on a panel that discussed aspects of behavioral finance. Rosenfield says he was somewhat familiar with the subject, and that after the conference he dived into it with both feet. "I read voraciously on the topic, pestered Danny and got tutored," he says.  

From that came a collaboration that led to the creation of the dual-portfolio system that's now one of Guggenheim's cornerstones.  

"Every client's mandate is different," says Charles Stucke, Guggenheim Investment Advisors' chief investment officer. "One person's bold account can be another person's conservative account."  Riskometry helps determine the scope and makeup of these separate accounts. "We find if we anchor the risk budget first then we can outline the playing field for seeking investment opportunities," Stucke says. "Our next step is deciding how to fully spend that risk budget in search of return."  Guggenheim describes itself as a matrix organization that incorporates different levels of expertise servicing each account, with multi-person teams of up to seven staffers involved in various steps of the wealth management process. And the client's family office is involved in that process from the get-go. 

"Family offices often are helpful in working through the machinations of an extended family's set of accounts and managing those accounts over time," says Stucke, who previously was head of European manager search for Morgan Stanley's alternative investment partners group. After establishing the broad parameters of a particular family's finances, Guggenheim often treats each individual as a unique investor with his or her own risk profile.

That requires a lot of one-on-one time with each person. 

"That's usually a multistep discovery process because we find that even husbands and wives-when interviewed separately-articulate different views on risk tolerance and regretting gain," Stucke says. "When we bring them back together again to compare notes, we can help them reconcile these differences and identify important points of compromise. It's a lot of work, but it's something our families expect and it's worth it." 

Portfolio Construction
Guggenheim's centralized investment group has two subgroups. One group handles risk profiling, asset allocation and portfolio management. The other group researches outside investment managers used in client portfolios. The latter is a key part of the Guggenheim story, and Stucke and Rosenfield say that each manager gets a rigorous go-over before they're approved. The goal is to find managers not only with good performance records, but also with sound compliance and practice management backgrounds to avoid potential Madoff-esque time bombs.  

"You can never be sure, but we work hard and don't rely on track records alone," Rosenfield says. "We also meet people, do physical and structural due diligence, and a full-on interrogation of managers' strategies. We never invest in something opaque. One of the biggest problems with fund of funds is you often can't figure out what they're invested in."