Facts & Resources

New Book, “The Aspirational Investor: Taming the Markets to Achieve Your Life’s Goals,” Published Today by Merrill Lynch Chief Investment Officer Ashvin Chhabra

Tuesday, June 2, 2015 1:30 pm EDT



Public Company Information:

"The Aspirational Investor: Taming the Markets to Achieve Your Life’s Goals"

Merrill Lynch Wealth Management Chief Investment Officer Ashvin Chhabra today published a new book, “The Aspirational Investor: Taming the Markets to Achieve Your Life’s Goals” (HarperBusiness). The book defines a Wealth Allocation Framework that provides financial advisors and their clients a better way to think about investing, starting with a deep understanding of investors’ goals, values and risk appetite.

“Ashvin is a true pioneer in the field of goals-based wealth management. The Wealth Allocation Framework is a prime example of the important intellectual capital we offer our clients and represents the evolution of our thinking about how to measure the success of an investment strategy,” said Andy Sieg, head of Global Wealth and Retirement Solutions for Bank of America Merrill Lynch.

John Thiel, head of Merrill Lynch Wealth Management, said: “Investing is not just about beating benchmarks. Achieving goals requires more informed discussions about what matters most, and the flexibility to course-correct when priorities and personal situations inevitably shift throughout life. We see the Wealth Allocation Framework as an important underpinning to goals-based wealth management and the means by which our advisors help our clients achieve outcomes that are meaningful to them.”

Said Chhabra: “For decades, the financial planning process has addressed risk largely through asset allocation and portfolio diversification. Yet portfolio diversification does not go far enough in helping investors to reach their goals. Even broadly diversified portfolios can experience extreme volatility, and people have personal financial obligations they need to meet regardless of market conditions.”

The premise of the Wealth Allocation Framework is that a comprehensive financial strategy should take into account total wealth and all factors of a person’s life that might influence it, including their primary residence and their ability to earn income and build businesses. With this approach, dialogue and planning move beyond a narrow focus on portfolio construction and market risk to a deeper understanding of needs, goals, personal priorities, individual circumstances and both the financial and non-financial assets that contribute to total wealth.

Allocating risks and resources

The Wealth Allocation Framework allocates clients’ resources among three wealth categories:

  • Personal assets: those meant to protect the investor’s basic needs and standard of living, such as cash flow, primary home, traditional annuities, and insurance.
  • Market assets: traditional investments such as equities and fixed income that deliver risk and return in line with market performance.
  • Aspirational assets: assets might include a family business, investment real estate, concentrated stock, stock options or an art collection.

It also identifies three types of risk that an investor may take on for specific purposes:

  • Personal risk: risk that could jeopardize the investor’s basic standard of living, such as loss of income, natural disaster, death or disability.
  • Market risk: risk that comes from exposure to financial markets (the widely known dimension of risk).
  • Idiosyncratic risk: risk that is specific to one asset or small group of assets with a risk of substantial loss of capital.

Since introducing the Wealth Allocation Framework in August to a sub-segment of Merrill Lynch Financial Advisors, more than 30,000 clients have created a Risk Allocation Statement using the framework’s approach. The range of goals identified by these clients – including funding education, buying a home, and affording a certain lifestyle in retirement – illustrates the diversity of factors that drive financial decision-making and help explain reaction to market events. A white paper and video describing the Wealth Allocation Framework are available.

Merrill Lynch Wealth Management
Merrill Lynch Global Wealth Management is a leading provider of comprehensive wealth management and investment services for individuals and businesses globally. With 14,183 Financial Advisors and over $2 trillion in client balances as of March 31, 2015, it is among the largest businesses of its kind in the world. Merrill Lynch Global Wealth Management specializes in goals-based wealth management, including planning for retirement, education, legacy, and other life goals through investment, cash and credit management. Within Merrill Lynch Global Wealth Management, the Private Banking and Investment Group focuses on the unique and personalized needs of wealthy individuals, families and their businesses. These clients are served by more than 150 highly specialized Private Wealth Advisor teams, along with experts in areas such as investment management, concentrated stock management and intergenerational wealth transfer strategies. Merrill Lynch Global Wealth Management is part of Bank of America Corporation.

Source: Bank of America Corporation. Merrill Lynch Global Wealth Management (MLGWM) represents multiple business areas within Bank of America’s wealth and investment management division including Merrill Lynch Wealth Management (North America and International), Merrill Lynch Trust Company, and Private Banking and Investment Group. As of March 31, 2015, MLGWM entities had over $2 trillion in client balances. Client Balances consists of the following assets of clients held in their MLGWM accounts: assets under management (AUM) of MLGWM entities, client brokerage assets, assets in custody of MLGWM entities, loan balances and deposits of MLGWM clients held at Bank of America, N.A. and affiliated banks.

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