Tag Archives: wealth management


Wealth management advice from BMO’s Ashley Ober

Ashley Ober Managing director, Greater Phoenix and Scottsdale BMO Private Bank bmoprivatebank.com

Ashley Ober
Managing director, Greater Phoenix and Scottsdale
BMO Private Bank

Ashley Ober, managing director, Greater Phoenix and Scottsdale, BMO Private Bank

Ober oversees a team of professionals dedicated to providing high net worth individuals, families and organizations, with a full range of wealth services as part of an overall personal wealth management strategy. He joined BMO in 2010 and has 29 years of experience in financial services, 24 of those in the Phoenix and Scottsdale markets.

2015 trend to watch:

“The most significant impact on wealth management in 2015 will be the increased importance and need for holistic financial planning. Far too often we see people who do not have a long-term game plan or road map for their financial lives. To a large degree, in today’s information age, investment management and banking have been commoditized. Financial planning is very personal and
customized to each person’s or families’ needs and priorities. As our population ages and the next generation inherits a tremendous amount of wealth, financial planning will have a significant impact on wealth management in the future.”

Advice for 2015:

“Make sure you have a financial plan and roadmap for your future financial life. Once you have a longterm plan in place that is customized to you and your family, you have a foundation in place to build upon. The plan should include an investment strategy that is consistent with your long-term goals and objectives. A holistic, disciplined approach is the key to future financial success.”

Best Arizona investment:

“Although it is not publicly traded at this time, I would invest my own money in
Infusionsoft, which provides the only all-in-one sales and marketing software built just for small businesses. The company has a strong business model with a recurring revenue stream. The company is well capitalized and they provide a service and product that small business cannot afford to replicate.”


Wealth management advice: Dillan Micus

Screen Shot 2015-02-06 at 10.26.52 AM

Dillan Micus Divisional executive vice president AXA Advisors Southwest axaadvisorssouthwest.com

Dillan Micus, Divisional executive vice president, AXA Advisors Southwest

Micus leads more than150 professionals across the Southwest and innovated both the firm’s successful “Firm of Firms” platform andits Retirement Income Distribution Strategy process, which helps identify, address and organize the variousfactors of retirement planning. Under Micus, the branch earned AXA’s President’s Trophy six times and hasgrown from $4 million to $18 million a year in overall sales revenue. 2015 trend to watch: “The industry is facing a seismic shift. There are record numbers of people entering retirement years and/or moving toward the transfer oftheir wealth. Education – both educating associates toeffectively assist with the distribution and transfer of wealth, and educating the aging population itself – is critical and hopefully a trend that positively impacts our industry in 2015 and beyond.”
Advice for 2015: “One can elect to save 10 percent of his/her income for retirement and continue to do so for the next 40 years. But, why not consider increasing the percentage as one’s salary increases? Increasing one’s percentage little by little along the way can have an
exponentially positive impact at retirement and beyond.” Best Arizona investment: “Personally, I support any financial services business that invests in its people and their continuing education as we help Baby Boomers move toward retirement and eventually the transfer of wealth in the history of our state – and nation.”


Money Tree, WEB

Wealth Management Guide: Gregg Balderrama

Gregg Balderrama CFA, CAIA Portfolio manager Mutual of Omaha Bank Wealth Management mutualofomahabank.com

Gregg Balderrama
Portfolio manager
Mutual of Omaha Bank Wealth Management

Gregg Balderrama, CFA, CAIA, Portfolio manager, Mutual of Omaha Bank Wealth Management

Balderrama’s responsibilities include working with high net worth clients to develop investment strategies and structure portfolios to achieve their investment objectives. Balderrama earned his B.S. in finance and accounting from the University of Arizona. He also holds the Chartered Financial Analyst (CFA) and Chartered Alternative Investment Analyst (CAIA) designations

2015 trend to watch:

“Federal Reserve and
International Central Bank policy will continue
to have the biggest impact on market conditions and wealth management in general in 2015. The direction of interest rates, currencies and the stock market will all be a function of this.”

Advice for 2015:

“Just like all complex systems, your financial health needs to be re-evaluated and managed over time to achieve your goals. In any year – not just 2015 –you should work with trusted advisors you can learn from, who have your best interests in mind and who make your life easier.”

Best Arizona investment:

“It sounds cliché, but you really must first figure out how much risk you want to take and then invest in a company or industry you fully understand. If you don’t have the time to become an expert in the area you want to invest in, you should invest with someone you trust who does.”

Christina Burroughs
PHOTO BY: Shavon Rose

First job: Miller Russell Christina Burroughs

As managing partner at Miller Russell Associates, a leading Phoenix-based investment and wealth management advisor, Christina Burroughs works with client families on investment planning, strategic multi-generational planning, and philanthropy. But her work life wasn’t always so sophisticated.

Az Business: What was your first job? 
Christina Burroughs: At 14, I was eager to work and was eligible for a work permit, so I went out and found a job. My first job was busing tables.
AB: What did you learn from your first job?   
CB: I learned a lot from that job: to be proud of giving 100 percent effort, that sense of self-determination and freedom that comes from working hard and earning an income, and that working with others means being part of a team. All of which still contribute to my success today.

AB: What did you earn at that first job?  
CB: I earned minimum wage, $3.35 an hour, plus tips the servers shared with me – big money at 14. I worked hard busing tables because I wanted a share of those tips – doing my job well helped the servers do their jobs well, which earned me a share of their tips.
AB: What was your first job in your current industry?  
CB: I was an associate at Tanager Financial Services in 2001. I was coming out of the field of clinical psychology and had an opportunity to join what was, at that time, the largest, most highly regarded multi-family office for high net worth clients in New England. It was an incredible opportunity and a risk worth taking. 

AB: What has been your biggest professional challenge?  
CB: I was momentarily in an environment where the clients’ interests were not the first and last consideration. Since this is an absolute requirement to me professionally, I joined and have helped grow a firm, Miller Russell Associates, where that value is non-negotiable.

Shifting the financial focus

Dillan Micus

Dillan Micus: Under his leadership since 2006, AXA Advisors Southwest has grown from approximately $5 million to more than $18 million a year and averaged a 30 percent increase in staff each year – even during the recession.

Many fail to plan how retirement funds will be distributed, Micus says

Az Business: What challenges do you see your generation facing in regard to wealth management?

Dillan Micus: In regard to helping people my age with their actual wealth management challenges, I empower my team to use our Retirement Income Distribution Strategy (RIDS). Often, people spend all of their time focusing on pre-retirement accumulation, but fail to plan how those assets will be distributed during retirement, based on the things they want to actually do and places they actually want to go. This way of planning also neglects to address the most common risk factors that threaten one’s seemingly perfectly planned retirement years – longevity, inflation, taxes, interest rates, volatility and emotions. Through RIDS, we help our clients organize their money into three buckets – a cash reserve bucket, lifestyle bucket and inflation fix bucket – thereby creating a greater level of certainty that they will be able to live the lifestyle they want to live in retirement.

Moving on to actual wealth managers in my generation, I see two clear challenges, both of which AXA seeks to turn into opportunities.

First, those in my generation are neither “starting out” in their wealth management careers, nor approaching retirement. More often than not, they are eager for autonomy. So, we give it to them via an uncommon approach to comprehensive planning I developed called “Firm of Firms,” which empowers our best people to launch their own firms with our back-end support. This, in turn, allows our clients to receive a very high level of support and resources through one specific firm while getting the experience of other firms within the family of offices to focus on each integral part of financial management.

Second, those in my generation grew up very close to the “Me Generation,” but it is critical that those in my industry focus on being a “We” generation, meaning community engagement and servant leadership. I model this as a long-time member of the Boys & Girls Clubs of Greater Scottsdale board as well as my work as a Thunderbird. Our office also sets aside one day each year to volunteer together, even going so far as to put on our own charity event as a team.

Weaknesses And Strengths Of Wealth Management Advisers, Service Models - AZ Business Magazine June 2010

Popular IRAs Have Dark Downsides, Experts Warn

IRAs and annuities are growing in popularity as retirement investment options, according to recent surveys, but three financial experts warn they can have serious disadvantages.

“Last year, four out of 10 U.S. households had IRA accounts – that’s up from 17 percent two decades ago,” says CPA Jim Kohles, chairman of RINA accountancy corporation, citing an ICI Research survey. “But they can be bad for beneficiaries if you have a very large account.”

Investment in annuities, touted as offering a potential guaranteed income stream, alsocontinue to grow with sales up 10 percent in the second quarter of this year.

“Annuities have several dark sides, both during your lifetime and for your beneficiaries,” says wealth management advisor Haitham “Hutch” Ashoo, CEO of Pillar Wealth Management. “My business partner, Chris Snyder, and I wouldn’t recommend investing in them.”

Putting large amounts of money in either annuities or IRAs can have serious tax consequences for your heirs, say Kohles, Ashoo and attorney John Hartog of Hartog & Baer Trust and Estate Law.

“If you want to ensure your beneficiaries get what you’ve saved, you need to take some precautions,” Hartog says.

The three offer these suggestions:

• Take stock of your assets – you could be worth more than you think: If your estate is worth more than $5.25 million (for couples, $10.5 million), your beneficiaries face a 40 percent estate tax and federal and state income taxes, says Kohles, the CPA. “It can substantially deplete the IRA,” he says.

To avoid that, take stock of your assets now – you may have more than you realize when you take into account such variables as inflation and rising property values. Be aware of how close to that $5/$10 million benchmark you are now, and how close you’ll be a few years from now.

“Consider vacation and rental properties, vehicles, potential inheritances,” Kohles says.

Also, take advantage of the lower tax rates you enjoy today, particularly if they’re going to skyrocket after your death. “A lot of people want to pay zero taxes now and that’s not necessarily a good idea,” he says. For instance, if you’re at that upper level, consider converting your traditional IRA to a ROTH IRA and paying the taxes on the money now so your beneficiaries won’t have to later.

• No matter what your estate’s value, avoid investing in annuities. Wealth management adviser Ashoo warns annuities, offered by insurance companies, can cost investors an inordinate amount of money during their lifetime and afterward.

“Insurance companies try to sell customers on the potential for guaranteed income, a death benefit paid to beneficiaries, or a ‘can’t lose’ minimum return, but none of thosecompensates for what you have to give up,” he says.

That includes being locked in to the annuity for five to seven years with hefty penalties for pulling out early; returns that fall far short of market investments on indexed annuities; high management fees for variable annuities; declining returns on fixed-rated annuities in their latter years; and giving up your principle in return for guaranteed income.

“If you own annuities and have a substantial estate, there are smart ways to unwind them to minimize damage,” Ashoo says.

• Consider spending down your tax-deferred IRA early. If you’re in the group with $5 million/$10 million assets, it pays to go against everything you’ve been taught and spend the IRA before other assets, says attorney Hartog.

“It’s a good vehicle for charitable gifts if you’re so inclined. And if you’re 70½ or older, this year you can direct up to $100,000 of your IRA-required minimum distribution to charity and it won’t show up as taxable income,” Hartog says. (That provision is set to expire next year.)

You might also postpone taking Social Security benefits until you’re 70½ and withdraw from your IRA instead. “That willmaximize your Social Security benefit – you’ll get 8 percent more.”

Finally, anyone who has accumulated some wealth will do best coordinating their financial planning with a team of specialists, the three say.

As a CPA, Kohles is focused on minimizing taxes; wealth management adviser Ashoo’s concern is the client’s goals and lifestyle; and lawyer Hartog minimizes estate taxes.

“We get the best results managing tax consequences and maintaining our clients’ lifestyles by working together,” Hartog says.


United Capital acquires Arizona firm

United Capital Financial Advisers, LLC (“United Capital”) continues its expansion in the Southwest, announcing the acquisition of a Scottsdale-based wealth management firm. Founded in 1998 by husband-and-wife partners, Brotherton Investment Consultants is United Capital’s first foothold in Arizona.

Founders Donna Brotherton, CFA®, and John Brotherton, CFP®, join United Capital as managing directors, bringing with them a staff of financial professionals. Their firm, Brotherton Investment Consultants, has approximately $150 million in assets under advisement.

“Our process has always been, first and foremost, about the client—what motivates them, what is important to them—and we love the symmetry with United Capital’s process. They get what wealth management is all about and offer us invaluable tools and resources to help our clients. Having the Honest Conversations® toolkit to engage with clients is a major addition to our planning process. The exercise provides a safe environment and helps couples get to the heart of the matter with their finances—why we are all sitting at that table—and finally gives the ‘silent partner’ a voice in the financial decision-making process,” Donna offers.

The Brothertons both cited the administrative burdens that were increasingly taking time away from the client and impacting the firm’s overall growth. Their partnership with United Capital was driven in part by the need to alleviate these operational frustrations.

“The Brothertons exemplify the type of advisers we aim to partner with—their goals and client-centric values align with our own, which we know is a strong differentiator from the industry,” says Matt Brinker, Senior Vice President, Partner Development and Acquisitions at United Capital. “The firm is a valuable addition, and we are excited to support their team with administrative and planning efforts as they continue to grow and help their clients.”

Over their years in the industry, the two advisers have come to understand the qualities that they were looking for in a partner firm. They plan to incorporate all of United Capital’s tools and resources in their wealth planning process to ensure that all clients are living their One Best Financial Life™.

“We were most impressed with United Capital’s capabilities, which include a range of factors from their advanced integration and advice process to their streamlined quality deliverables and software implementation. We are confident that our partnership is best for our clients and for the firm as we continue to expand. Joining United Capital allows us to focus on our clients’ needs, our marketing efforts, growing the business, recruiting and mentoring young and up-and-coming advisers,” John says.

John has over 32 years of experience and Donna has over 26 years in the industry, and the two advisers bring a depth of knowledge and passion to their practice. The Brothertons currently reside in Scottsdale with their children and in their spare time, participate in competitive Theatre On Ice figure skating events with their twin daughters.

As of March 31, 2013, United Capital and its affiliates have approximately $17 billion in assets under advisement and, with this recent addition of Brotherton, 47 offices.


Enterprise Bank Offers Free Business Course

Enterprise University, an educational program offered by Enterprise Bank & Trust, will continue its Spring 2013 courses with an April 2 class on “Personal Fiscal Fitness: The Critical Components of a Financial Plan.” The morning workshop includes a continental breakfast and will focus on wealth accumulation, retirement funding, estate planning and ensuring financial goals are met. The instructor is Susie Brousseau, Enterprise Bank & Trust’s senior vice president and director of wealth management for Arizona.

Enterprise University provides free educational seminars on a variety of relevant topics for business owners and their leadership taught by experts in a variety of fields including advertising, marketing, business continuity, financial planning and more.

WHAT: Course for business leaders on “Personal Fiscal Fitness”

WHERE: Phoenix Country Club, 2901 N. 7th St. Phoenix, Ariz. 85014

WHEN: Tuesday, April 2, 2013, 8:30 a.m. – 11:30 a.m.

COST:    Free to business owners and leaders. Registration is required.

RSVP: Visit www.enterprisebank.com/eu to register

Susie Brousseau began her education at the College of Charleston in Medical Technology. Shifting her focus to financial services, she achieved her Chartered Life Underwriter (CLU) designation in 1984, her Chartered Financial Consultant (ChFC) designation in 1985 and her Certified Financial Planner (CFP) designation in 1990.

Brousseau’s areas of expertise include estate planning, retirement planning, charitable giving, business planning, life insurance, investment management and asset protection strategies. She has received numerous awards, spoken regionally and nationally on wealth planning topics and has conducted numerous client seminars.

Enterprise University will continue through May, with courses during the month of April focusing on marketing strategy and sales management.

The following courses will be offered in April:
• April 24: Creating a Marketing Strategy to Build Brands and Drive Results
• April 30: Creating a Digital Strategy to Drive Business

For questions on Enterprise University call Kay Erb, Director of Enterprise University, at 800-396-8141, ext. 13203.


When to form a family office

The family office model has existed for centuries, beginning with European families and later adopted by American industrialists, like the Carnegies, Phipps and Rockefellers. GenSpring Family Offices improves upon the family office model in three ways: creating a multi-family office with multiple locations; advising on all elements of wealth and providing sustainable wealth management.

Each family member benefits from a consolidated group of professionals in the family office – investment and financial managers, estate planners, tax accountants, philanthropic administrators, and compliance personnel all dedicated to, and knowledgeable about, each family’s unique situation.

A family office is usually created when: (1) the liquid assets of the family grow to such a size that professional management is required for the investible assets of the family that cannot be provided by the family business professionals, since they usually do not have the expertise to manage these assets or, if they do, it cannot be done effectively without the business suffering; (2) the family’s business is sold creating liquidity that again needs to be managed by the appropriate professionals; or (3) the family has attempted to manage their personal financial affairs, but the business has suffered, with the time they have spent doing so, or they realize that they are not equipped to manage the level and complexity of their own assets.

Relying on objectivity, not fees

A family office differs from financial planners, investment managers, stockbrokers, bankers, and accountants in the services it provides and its role as a trusted family advisor. The “true” objective family office sells no product to their clients except that of their service and it collects no fee from any person or organization except the client of the family office.

The family office is not paid a broker fee for insurance placement, securities purchase, real estate purchase, custody, commissions or transactions fees, unlike that of brokerage houses, investment management firms, and investment banking firms, private banks, and product-compensated financial planners. The real difference between a family office and many of the organizations that provide product to the family office industry is that the family office has a “serve” culture and the others have a “sell” culture. In the “sell” culture, the client does not pay a fee for the service; the client pays a fee for the product.

Taking care from A to Z

The full-service family office not only plans, but also executes and manages all of the financial affairs of a family over generations. The typical full-service family office will provide the following services: investment management, which includes asset allocation and investment policy development, in addition to performance reporting and monitoring; bill paying; cash flow management and accounting for investment assets in addition to all personal assets; tax projections and advice with tax return preparation; philanthropic management, including the grant making process and all necessary filings; estate planning, execution of the plan, and trust administration; regular organized and facilitated family meetings; insurance placement and management and personal services as needed by the family.

Final Thoughts

While there are many issues for a family to consider when deciding to form or join a family office, the most important factor is the objective and wishes of the family. Family members should work together closely to make sure the family office model they choose is the correct mode with the right services for themselves and future generations. The development of a family governance structure with the participation of the family members would help insure that the family office continues to serve the family needs.

Patricia M. Soldano is chair of the GenSpring Family Office’s western region which includes Phoenix. Learn more at www.genspring.com.


Families should act now to preserve wealth

Families who have had to face the estate tax know that it can destabilize their family businesses and create major headaches for their children and grandchildren.

Unfortunately, for more than a decade it’s been nearly impossible for families to do informed planning with any solid understanding of what Washington’s future intentions may be. In fact, the only thing that has seemed certain and permanent in the estate tax world is the persistence of a situation that lacks any trace of certainty or permanency.

This challenging and unpredictable environment has made many families reluctant to take advantage of what could be a once-in-a-lifetime window of opportunity. Now is a key time for families to think creatively about preserving their wealth and carefully weigh their options.

Use it, or lose it

The 2010 Tax Act has lowered the estate, gift and generation-skipping transfer (GST) tax rates to their lowest point (35 percent) in 80 years and increased the exemption to an historic $5.12 million ($10.24 million per couple). Unfortunately, Congress was only able to agree on these parameters until the end of 2012. Absent further legislative action, the estate tax will automatically revert to pre-2001 levels in 2013, meaning a confiscatory 55 percent rate (up 20 percentage points) on all assets over $1 million (down $4.12 million). For many families, this means 2012 is an opportune time to “use it or lose it.”

On the menu: death taxes

As the two parties serve up differing visions of tax reform, death taxes are also on the menu. As Congress scavenges for revenue, many on Capitol Hill have their sights set on high-net-worth and high-income Americans. In the estate tax sphere, serious threats have emerged to legitimate planning techniques.

These proposed changes include making two-year rolling grantor retained annuity trusts (GRATs) and 100-year GRATs impossible, altering the tax treatment of grantor trusts and limiting the GST tax exemption to 90 years.

Some have even sought to turn the well-established economics of valuation on its head. Instead of valuing assets at what they’re worth, politicians have proposed ignoring restrictions on ownership (such as lack of marketability, liquidity and control) when determining a family’s estate tax liability. This change could lead to peculiarly distorted outcomes, as similar interests would be worth one amount to a family member, another amount to an unrelated party and an entirely different amount to the Internal Revenue Service.

In the current budgetary environment, the risk of these harmful revenue raisers is only increasing with time. Since most of these provisions have been proposed only prospectively, now could be the time to get GRAT, grantor trusts or dynasty trusts off the ground before Congress changes its mind and the rules of the game.

The presidential narrative

The future of the 2010 Tax Act isn’t likely to be determined until after the November elections in a lame duck session or when the new Congress is seated in 2013. Families are working with allies on Capitol Hill and in the family business community to minimize the potential for harmful outcomes and maximize the prospects for sustainable estate tax relief.

However, much will depend on the narrative and outcome of the upcoming presidential and congressional campaigns, any emerging lessons or political mandates related to tax policy and the resulting relative leverage of the parties. Regardless of whether Congress acts or how the politics shift, the bottom line for families is that now is the time to know and explore all the options, before they potentially disappear on Jan. 1.

Patricia M. Soldano is chair of the GenSpring Family Office’s western region which includes Phoenix. To learn more, visit www.genspring.com.


Wealth Management Q&A With GenSpring Executives

Here are answers to some common wealth management questions from Pat Soldano, chairman – Western Region, GenSpring Family Offices, and Mark Mushkat, senior advisor – Western Region, GenSpring Family Offices:

What is the biggest mistake people make — that could be corrected by an effective financial adviser — when they try to manage their assets on their own? They misjudge the time, expertise and resources necessary to truly manage their assets effectively, and achieve an appropriate level of return for an appropriate level of risk.

What has been the biggest change in wealth management strategies in the wake of the recession? Investors have become more risk-averse and become less trusting of the wealth management industry in general. They are questioning their advisors more and trying to understand if their advisors are doing what is in the best interest of the investor or the advisor and/or their firm!

Is there one particular trend you’re seeing in clients or is there one particular strategy you’re steering clients toward that may be different from strategies employed five years ago? GenSpring has concerns about the risks of the stock market relative to its expected returns. As this market will likely remain highly volatile, we expect comparable returns in other asset classes without as much risk as stocks.

Are there things that people can or should do between now and the end of the year to protect or build their wealth? Take advantage of the $5 million per person gift tax exemption, by using as much of it as practicable, based on their spending needs, before it may go away at the end of 2012. This will take assets out of their estate that would other be subject to a 35 to 55 percent estate tax at their death.

What advice would you give someone who is just reaching an age where they are starting to worry about protecting and building their wealth? Careful financial planning is key to effective saving, investing and spending. It’s important to consider taxes, inflation, market risks and expected returns in asset classes like stocks, bonds, CDs, real estate, etc.

What advice would you give someone who is established, but wants to protect and build their wealth for the next generations? Our families find it helpful to have clear objectives spelled out in an Investment Policy Statement. This document is a road map for good times and for bad, and it’s useful to share with guardians of future generations to maintain a consistent and disciplined investment plan.


Benito Almanza Arizona State President Company: Bank of America - AZ Business Magazine Sept/Oct 2010

CEO Series: Benito Almanza

Benito Almanza
Title: Arizona State President
Company: Bank of America

How would you assess the banking industry’s reactions to the new financial reform law? What are the industry’s biggest concerns, particularly in regards to derivatives and less onerous regulation on small banks?
Bank of America has generally supported reforms, including the formation of a new consumer protection agency. While this reform will ultimately have an effect on many businesses across Bank of America and other financial service companies, customers and clients should not expect any abrupt changes as a result of this legislation. The full impact and scope of the bill may take years to be felt, as regulators establish hundreds of new rules to implement the law.

The year 2009 was a tough one for Bank of America in terms of the federal bailout and executive shakeup. How has repaying the bailout and installing a new CEO affected the company’s operations and public image?
In December, Bank of America took a series of important actions to move our company forward. We repaid the entire $45 billion preferred stock investment provided under the Troubled Asset Relief Program (TARP), plus interest. A few days later, Brian Moynihan was selected to lead our company. He has a level of credibility and broad-based experience few can rival, having led every major line of business in financial services, including wealth management, corporate and investment banking, and consumer and small business banking.

As Arizona president for B of A, how have you — and your peers from other large banks — addressed the concerns Main Street has about Wall Street?
The industry understands that our well-being is interconnected with the health and vitality of the economy and the communities we serve. It is not in any companies’ interest to put profit over common sense. Nor is it in anyone’s interest to lose sight of the value our industry provides among legitimate concerns about the difficulties of the recent past. Our challenge for the foreseeable future — and I think we’re moving in the right direction — is to reconcile this and strengthen our financial system by working with leaders and regulators in a spirit of trust and goodwill.

In speaking for my own company, Bank of America has introduced clarity commitments within our card, deposit and mortgage services to make sure customers receive clear and easy to understand language about their relationship with our bank. In addition, our new overdraft fee changes went into effect July 1, whereby we will decline a debit card transaction at the point of sale when there is not enough money in the account for the transaction, and not charge overdraft fees to the customer.

Small businesses are having a difficult time getting loans and various lines of credit. B of A prides itself on its No. 1 SBA-lender status. How important is that role in the economic recovery?
With 4 million small businesses customers — more than any other bank — Bank of America feels a deep sense of responsibility to support them in every way possible. In the first half of 2010, we provided $45.5 billion in loans to small and medium-sized companies, well on our way to meeting our pledge to increase lending by $5 billion over 2009 levels, or $86.4 billion.

We continue to also look for creative ways to help these businesses bridge to a stronger economy. For example, we recently announced a new program that can help as many as 8,000 small businesses obtain $100 million in federal microloans through nonprofit lenders like CDFIs, by providing CDFIs with grants to cover loan loss reserves required to get the SBA/USDA loan capital. This is low-cost, long-term capital for small business microloans nationwide over the next 12 months.

What challenges and opportunities lie ahead for the banking industry in Arizona?
Arizona’s economy will probably be on a slower track than most states because of the significant losses in our housing and jobs markets. That being said, there are many bright spots to look forward to and we must continue to make every good loan we can and focus on opportunities that will help our long-term economic recovery …

    Vital Stats

  • Has been with Bank of America for more than 30 years
  • Responsible for the overall performance of all business banking activities in Arizona
  • Graduate of Stanford University and Santa Clara University
  • Member of the California State Bar Association
  • Member of the U.S. District Court Northern District Association
  • Member of the Greater Phoenix Leadership and Arizona Bankers Association
  • Serves on the board of Phoenix Aviation and Teach for America
  • www.bankofamerica.com

Arizona Business Magazine Sept/Oct 2010

Weaknesses And Strengths Of Wealth Management Advisers, Service Models - AZ Business Magazine June 2010

The Recent Market Turmoil Revealed The Weaknesses And Strengths Of Wealth Management Advisers, Service Models

The market turmoil of the last 18 months has caused investors to ask a lot of questions. Am I properly diversified and allocated to withstand additional market gyrations? Is my risk tolerance really as high as I think it is? Do I trust my financial adviser and those I’ve placed in charge of managing my wealth?

The answer to the last question — particularly within the past two years — rests largely on the issue of client service. Since no investor was immune from the market declines witnessed in 2008 and 2009, the issue of client service has become increasingly important to many investors.

The recent market turmoil has not changed the wealth management client service model; it has revealed it. Weak models have been exposed and strong models have withstood the pressure.

A strong service model has a clearly defined process. And while every service professional has a process, not all can readily identify or communicate theirs. For many, the process is merely a set of reactions to client concerns, questions and requests. But therein lies the problem, as such a reactive model inevitably leads to inconsistency in delivery.

For example, say an investor’s portfolio profile calls for a 70/30 mix of equities to fixed-income investments. Following the recent bull market run, the equities portion of the portfolio becomes over-weighted, and the investor has not objected as he/she is enjoying watching their overall portfolio increase in value. Therefore, no change to the equity/fixed-income model is discussed by either the investor or the financial adviser. Suddenly, the portfolio mix is 85/15. Is there a service process in place to rebalance the portfolio back to its original target allocation percentages? Without a detailed model, a financial adviser may find out that he/she has unknowingly subjected an investor’s portfolio to more risk than desired simply by not having a proactive process in place.

A well-articulated service process outlines deliverables, timeline and accountability for completion. This process can serve wealth management professionals as a guide during times of turmoil and as motivation when market activity hits a lull, ensuring consistency regardless of external circumstances. In short, managing wealth should be handled the same way as running a successful business. There must be a business plan defining your goals, consistent performance reviews to assess whether goals are being met, and accountability of every member in achieving these goals.

There are five important characteristics for every service process:

  • Repeatable — Consistency of service is oftentimes more important than the service itself. Whatever the model, an adviser or team must be able to apply the same definition and process multiple times for the same client or different clients.
  • Scalable — Whether the business is small with just a handful of clients or much larger with a broad, complex client base, a service model must be scalable and work for all clients. Tailoring service is inevitable and appropriate, but models that don’t enable an adviser to “franchise” the model are far too cumbersome.
  • Deliverable — While this characteristic is fairly intuitive, many businesses identify a service model that is unrealistic in its delivery structure based on time, resources and other limitations. Recognizing limitations and appropriately weighing the service needs of the clients with an honest assessment of resources is critical. The focus of the communications should certainly be centered on the clients’ best interests. However, over-promising and under-delivering is never a recipe for successful client service.
  • Measurable — Just as an investor needs to measure the results of his/her investments, so too should financial advisers be able to measure the results of their service. Don’t be fooled into thinking that such a measure is merely a reflection of client satisfaction. There are many ways — quantitative and qualitative — to measure client service. Retention, accountability, success achieving client goals, consistency of message, tone and frequency of dialogue are all factors that should be considered.
  • Proactive — Ensure the delivery of service occurs regardless of market conditions. Market lulls often draw advisers into a false sense of complacency. The discipline of consistently applying the pre-established service model pays dividends in the end.

In addition to these process characteristics, there are other important service functions such as real-time availability, open discussion and dialogue, and regular reviews of the clients’ long-term objectives. But it is the consistent execution and the extent to which advisers have built these functions into a broader, well-defined service model that separates the mediocre from the great.

The recent market turmoil didn’t change the fundamentals of wealth management client service as much as it emphasized it. Advisers who did not have a definable service model were often themselves traumatized by the unfortunate events in late 2008 and 2009, and were thus less effective in working in their clients’ best interests and in addressing their concerns. They were exposed, though exposed in a different way from their more successful industry peers.

Regardless of market activity, wealth management professionals who develop a strong client service model and apply it consistently will have success.

Arizona Business Magazine June 2010

shattered glass

Wealth Managers Can Diagnose And Treat Battered Financial Confidence

If the past several quarters have taught us anything about wealth management, it’s the importance of routine maintenance, diagnosis and treatment of our portfolios — even if they are ailing. Much like the consistent faith we place in our doctors for our health, so too must we place trust in our wealth management advisory teams.

Oftentimes, it is the most difficult periods that strain our trust and twist our thoughts. When managing your wealth, don’t let fear or uncertainty guide you. Wealth management is not a product, or even a series of products, but a long-term strategic approach to assisting clients through comprehensive planning, solutions and personalized service.

Just as you wouldn’t seek a dermatologist for a kidney ailment, your selection of a wealth management clinician should be based on a long-standing track record of success in certain specializations. Similarly, seek financial institutions with strong, proven stability and those that are regulated and monitored by federal oversight agencies. Finally, successful wealth management relies on the integration of banking, financial planning and investment management with professionals on client-focused teams working together to develop and implement the strategies clients need to meet their goals.

Bad economy, good opportunities
The past six months have prompted fearful retreats to the sidelines when it comes to managing portfolios. Like ignoring a persistent cough, simply brushing the problem aside will lead to further difficulty down the road. The toughest economic times often provide the biggest opportunities, but a bold and confident approach is required. A back-to-basics approach that examines the variability of returns by asset class — a long-trusted wealth management strategy — can be best suited for those who have lost confidence in their portfolio management.

Wealth management as a field has changed rapidly over the past decade. The advents of technology, the integration of a global economy and a better-educated investor have caused an evolution in the industry. The recent economic crisis simply highlighted this new reality. It also illustrates why your wealth management team should consist of those with differing areas of expertise. There are several upside factors to working with larger, established wealth management institutions. Besides a strong track record of success and regulatory oversight by the U.S. government, larger networks of wealth managers offer precise insight on how to best manage your money.

Ask questions such as: Should I invest in foreign markets? What are the best times to buy commodities and what kinds? How much cash should my portfolio have?

While one wealth management adviser can answer these questions broadly, the better analysis and decisions will come from members of your team who are experts in each sector of investment and have access to the latest, most up-to-date analytics and data.

Assessing your goals
Another key element to assess — and this is truer today than ever before — is your risk tolerance. This answer doesn’t come easily, but ask yourself a few key questions: When do I want to retire? What is my desired quality of life during retirement? What kind of estate am I planning to leave for my children and family?
By educating yourself on your expectations, you can clearly report your needs and desires to your wealth management team and, in turn, they can come up with various strategies and tactics for your portfolio.

Also, expect these goals to change. An investor just starting a family is in a far different financial place than an executive in his 50s and vice versa. Your wealth management team must fluidly advise you on what your portfolio should look like at different phases of your life. A trusted adviser and a seasoned plan is needed for every stage of the wealth management cycle: accumulation, growth, transfer and preservation.

Much like that patient/doctor relationship, education is paramount. Good physicians lay out clear, professional advice on the best way to care for your health. The best doctors will also advise you to seek second and third opinions. You should do no less with your portfolio.After all, you’ve worked hard to build a healthy portfolio.

For me, wealth management has been nearly a four-decade process of learning and building relationships with my clients. They trust me much like they trust their doctor. It’s a cycle of service that continues to evolve. As you would with your health, use the expertise of your most trusted confidants to help lead your decision making — it will pay off in the long run by keeping you healthy, wealthy and wise.


CD Rates Inching Higher Again

Bank-issued certificates of deposit rates are inching up, but if your one-year CD is maturing, you’re probably not going to like what’s being offered. That’s because CD rates took a dramatic drop in the past year as the Federal Reserve marched through a series of reductions starting last summer. The downward spiral was triggered by a belt-tightening credit crunch and a pervasive housing downslide.

Rates plunged as much as 325 basis points in the past year, dropping to as low as 2 percent from 5.25 percent.

Early last summer, it was not uncommon to see banks offering 5 percent interest or more on certificates of deposit. Then came the steady stream of rate cuts, and CDs were paying in the neighborhood of 2 percent. Now we’re seeing rates flirting with 3 percent, and teasers that are a tempting couple of percentage points higher.

Does the move to higher ground indicate that an economic turnaround has begun? Not necessarily, say banking experts.

“Rates are down considerably from what a consumer could have gotten last summer,” says Herb Kaufman, professor of finance and vice chair of the Department of Finance at Arizona State University’s W. P. Carey School of Business. “Now they’ve come back a little bit. They’re trending up as banks try to rebuild their deposit base and retain the deposits they have.”

Kaufman and Rick Robinson, regional investment manager for Wells Fargo Wealth Management Group, agree that one of the reasons for the modest increase is the perception that the Fed is not likely to reduce interest rates anytime soon. Another factor is inflation.

Robinson says the Fed is taking a wait-and-see approach to determine how the economy responds to seven rate cuts and whether inflation will remain somewhat subdued or will increase.

Kaufman notes that inflation, fueled by gasoline and food prices, appears to be accelerating.

“As that happens — and the feds are very conscious of that — you can expect banks will have to reflect the rise in inflation with their CD rates,” Kaufman says.

A significant improvement in the credit market adds to the likelihood of CD rates continuing to drift upward through summer, Kaufman says. He expects to see CD rates somewhat higher than they were last spring.

Is the inching up of CD rates a good or bad sign for the economy?

“I’d say it’s a little bit of a good sign,” Kaufman says. “It wouldn’t happen if the Feds weren’t comfortable with the credit market. Concerns have eased. Banks are comfortable to bid up rates, which means some of the constipation in the credit market has eased.”

The rise in interest rates could be tied to various factors.

“It’s usually a signal that the economy is beginning to do well or that the Federal Reserve wants to slow down the economy,” Robinson says. “Or it could mean that interest rates go higher because of supply and demand, because of inflationary pressures.”

But Robinson cautions: “A small uptick in rates is not a signal that we’re out of the woods or that economic growth is turning around. I still think it will be subdued in the second half of 2008. We expected low growth for the first portion of this year, and we expect to pick up the pace slightly in the second half.”

Another word of caution for investors: “Some banks might offer teaser rates of 5 percent for three months,” Robinson says, “but when it matures and resets, the rate will be consistent with what other banks are offering. Any bank in Arizona must remain competitive with the bank on the opposite corner.”

The creep upward of CD rates is a good sign for aging investors who rely on income from these investments to maintain their lifestyle. Conversely, the drastic decrease in rates since last summer was hurtful, especially for seniors.

“There is less money in their pocket,” Robinson says. “As their CDs matured, if they reinvested their money they’re more likely earning less than they earned previously. They have less to live on.”

Kaufman, too, says the increase is a good sign for retirees, so long as the rise does not pose a threat to economic recovery. Because of the roller-coaster ride the stock market has been on, some investors seeking a safe haven switched to CDs covered by the FDIC.

The collapse of investment bank Bear Stearns & Co. in March spawned some movement to CDs and safer, less volatile investments, including government-backed bonds. Robinson calls it “a flight to quality.”

“In the summer of 2007, banks went through a confidence crisis,” Robinson says. “Investors were worried. Some banks experienced an outflow of deposits, given investor concerns over their viability. That concern seems to have lessened. As the crisis grows longer, more information becomes available, which lessens the panic. People can understand the viability of their institution.”

The reason for the subtle increase in CD rates is anybody’s guess.

“Some banks might be willing to take a loss on deposits to shore up their capital base,” Robinson says. “They may want to increase deposits because they see opportunities to make loans. There are myriad reasons why rates go up, fluctuating in small increments of five to 10 basis points. It could be strategic or market related.”