Tag Archives: Jason Miller


Portfolio risk vs. achievement of goals

Risk tolerance is often the first subject wealth advisors assess when trying to help investors create the ideal asset allocation mix. As a result, determining individual risk thresholds becomes the foundation for portfolio planning. But can this focus on risk actually interfere with the attainment of personal financial objectives?

In determining the appropriate asset allocation for their investment portfolios, many investors (and their well-intentioned advisors) too often put the proverbial “cart before the horse,” focusing too much on minimizing short-term portfolio volatility. While short-term risk tolerance is a key consideration, basing an asset allocation on this alone risks designing a portfolio that may not be aligned with the investor’s long-term lifestyle goals. The answer may be to work “backwards” by first establishing goals and then “backing into” the asset allocation strategy that maximizes – or at least meets the client’s minimum level of comfort for – the probability of achieving these goals.

To help determine the asset allocation that will best help meet long-term lifestyle goals, consider the following questions:

What are my lifestyle goals?

Before entering into any investment plan, first establish specific goals. For many investors, these goals may include: maintaining a comfortable retirement; providing a college education for a family member; not becoming a burden on loved-ones; or perhaps leaving a family or charitable legacy. Whatever the goals, they first need to be clearly defined before an appropriate portfolio can be designed.

What is the current probability of success for achieving these goals?

After establishing goals, attempting to quantify whether or not they are realistic and achievable based upon different portfolio allocations represents the next step.  By analyzing the impact different portfolios may have on reaching your goals, you can determine what asset allocation gives the highest estimated probability of success. It is wise to work with appropriately trained and credentialed financial professionals during this process – they often have the experience and tools to conduct this type of analysis.

What is the potential volatility of the portfolio as it works to meet these goals and can I live with that volatility?

Even after determining the optimal portfolio in this manner, the work is not complete. The optimal portfolio for maximizing the probability of reaching your life goals may be too volatile for you to maintain the strategy for the long-term. Consistency is key to any long-term investment strategy, and you must be able to tolerate the short-term swings that will occur in order to reap the benefits over the long term. If you find that portfolio fluctuations cause you undue stress, you may need to modify your financial goals to fit a more tolerable portfolio.

So what is your real risk? Is it portfolio standard deviation or the risk of not meeting your lifestyle goals? For most investors, it is likely the latter.  For instance, it doesn’t make sense to “protect” your money in an overly conservative account if that allocation virtually guarantees you will run out of money during retirement. You would “protect” your money until it was all gone!  While not always the case, sometimes intelligently increasing portfolio risk will actually increase the likelihood of goal achievement.

To be clear, this is not a suggestion that investors take on more risk than is necessary to meet their financial goals. Rather, investors should determine their asset allocation based less on one-year downside risk tolerance and more on minimizing the risk of not accomplishing their stated goals. By determining asset allocation in this manner, you will become more aware of the effect of the portfolio decision on your life goals. You can then make an informed asset allocation decision, balancing any tradeoffs between short-term portfolio volatility with the achievement of longer-term goals.

Jason Miller is director of financial planning for BMO Private Bank, which offers a comprehensive range of wealth management services that include investment advisory, trust, banking and financial planning to meet the financial needs of high-net-worth clients. 

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BMO Private Bank Boosts AZ Senior Staff

BMO Private Bank announced new senior staff additions and promotions at the wealth management firm’s Arizona offices, which serve high-net-worth individuals, family-owned businesses, endowments and foundations throughout the Western United States.

• Ashley Ober is now serving as managing director of the greater Phoenix market, overseeing strategic development and delivery of wealth management services provided by a team of financial professionals. He was previously the firm’s regional director of private banking.
• Paul Tees was hired as the Tucson managing director. He will be responsible for the overall growth and management of the Private Bank for all of Southern Arizona, with a team of bankers reporting to him.
• Jason Miller, CFP®, was promoted to market manager for Greater Phoenix. In addition to his responsibilities as Director, Financial Planning – Western U.S., he will now have management responsibilities for the Arizona team of financial planners.
• Lindsey Jackson, an estate planning attorney, joined the firm as senior trust administrator. She will oversee trust administration for high-net-worth clientele.
• Tony Tanner was hired as a senior client advisor. This newly created position is designed to assist clients who have more complex financial planning and advising needs.
• Craig Shelley has been hired as a wealth advisor. He will serve as an advisor to high-net-worth individuals, families and organizations, including closely-held and family-owned business, endowments and foundations. He will assemble the appropriate team of professionals to provide a full range of wealth services as part of an overall personal wealth management strategy.

“The caliber of our team is second to none,” said BMO Private Bank Western U.S. President Matt Miller. “As we continue to expand our presence in the U.S., we are adding top-notch professionals who are truly committed to our clients and possess the skills necessary to help high-net-worth individuals and families navigate complex financial decisions to achieve their goals.”

New business in the Western U.S. region has increased significantly over the past year. To further support the influx, Miller says BMO Private Bank is increasing staffing to focus on positions that enhance the client experience.

For more information about services and operations, visit www.bmoprivatebank.com.


Most people don’t have financial plans

Most of us put more effort into planning a vacation than planning our financial future.

According to a study issued by BMO Harris Financial Advisors, only 38 percent of Arizonans have a financial plan, yet a majority admit a financial plan plays a critical role in achieving key life goals, such as saving for a home and being comfortable in retirement.

“There’s an obvious disparity when it comes to financial plans – most people know they need one, but they don’t have one,” says Larry Skolnik, regional sales manager, BMO Harris Financial Advisors. “No matter your income level, a financial plan can be an essential component to achieving your financial goals and ensuring the fiscal security of you and your family.”

Experts say a financial plan helps people work towards their short and long-term goals, providing a roadmap that outlines the path from where they are today to where they want to be in the future.

“Everyone should have some type of financial plan,” says Jason Miller, vice president and director of financial planning – Western U.S., BMO Private Bank. “Whether you are just starting out in your working years or nearing retirement, a solid plan is crucial to reaching your goals and protecting yourself and your loved ones.”

One crucial mistake people is assuming that they cannot afford to create a financial plan and will do so when they are making more money in the future, says Lisa S. Jackson, a certified public accountant and financial advisor with Whitman & Jackson CPAs.

“There is no better time to start than immediately,” she says.

Miller says the goal of a financial plan is to understand exactly where you are today and where you want to be in the future and then determine the necessary steps to get from point A to point B. A financial plan should include an analysis of where you currently are and what risks and/or challenges you currently face, as well as an analysis of how likely you are to reach your financial goals. Common areas included in a financial plan may be:

  • Budgeting and cash flow management
  • Asset allocation and investment management
  • Retirement planning
  • Risk management (e.g. life insurance coverage, disability insurance coverage, long-term care, creditor protection, etc.)
  • Estate planning

“When establishing goals it is recommended to include dollar and time specific targets in order to regularly measure the plan with clarity,” says Mary Collum,  senior vice president and director of private banking, National Bank of Arizona.

“Staying true to the vision is very important and will take discipline on both the planner and individuals’ part. Circumstances such as consistent injections of savings for the future, coupled with a plan to enjoy life today and live within one’s means, will weigh in on how successful the plan is.”

One of the most important elements to consider is making sure your financial plan is comprehensive and takes into account various possible outcomes, experts say.

“One of the most important elements of a plan is to make sure you are testing the outcome of your goals based on various economic environments such as rising interest rates, inflation, economic expansion or deflation and unforeseen events,” says Curtis L. Smith, registered investment advisor and wealth advisor for Raymond James Financial Services.

Smith’s list of things to consider when establishing your financial plan include:

  • Asset and investment allocation
  • Retirement accumulation and retirement income forecasts
  • Risk management items (liability coverage, life, disability, long-term care and health insurance)
  • Estate and philanthropy planning
  • Your economic and lifestyle goals (retirement needs,  savings goals, housing goals, vacations, etc.)
  • Family legacy goals

Another mistake people make when establishing the goals for their financial plan is not looking at all their investment options.

“People can get too focused on one investment strategy and forget to look at all options,” says Erik Pedersen, vice president of AXA Advisors. “The one they are focused on might not be the most suitable to reach their goals.”

Once your goals and plan are established, experts say you must remember to keep your financial plan organic and revisit the plan often.

“Be sure to revisit the plan when your goals have changed or events have happened in your life such as marriage, divorce, loss of job, inheritance or children going off to college,” Pedersen says. “But, there is truly never a bad time to revisit your financial plan.”

Once established, it’s been proven that financial plans will keep you financially responsible and healthy. According to the BMO Harris Financial Advisors study, 85 percent of Americans who have a financial plan say those plans have helped them achieve their goals, and 61 percent wish they has created a financial plan sooner.

“We are quick to take our car into the shop when the engine light blinks, giving us peace of mind our vehicle will take us safely to the next destination,” Collum says.

“Take charge of your financial world with this same sense of urgency in order to create and ensure you are headed on a successful journey to your financial destination.”