Research is Fundamental to Delivering a Client-Centric, Goals-Based Approach to Investing

In this month's interview, we speak to Anil Suri, Head of Asset Allocation and Investment Analytics for the Chief Investment Office of Merrill and Bank of America (BoA) Private Bank about the creation by BoA and EDHEC-Risk of a research chair on goal-based investing for the construction of retirement investment solutions for individuals. He also discusses the role of research in BoA's overall business strategy and the most important results raised during the 2019-2020 research chair. He finally explains what will be the next project of research, their hopes and expectations for 2020-2021.

Last year, EDHEC-Risk Institute announced the creation of a research chair sponsored by Bank of America to develop new research on goals-based investing for the construction of retirement investment solutions for individuals. Could you tell us how Bank of America understands the concept of "Goals-Based Wealth Management"?

Anil Suri:

Goals-Based Wealth Management (GBWM) is a scalable and consistent approach to help all clients pursue their goals. It can help us uncover client concerns and priorities and develop portfolios that align clients’ resources with what they want to achieve. Applicable across all age groups and levels of affluence, GBWM is a comprehensive and powerful approach to wealth management.

GBWM puts the investor, rather than the market, at the centre of the wealth management process and looks at his or her total wealth. Conversations, financial strategies, and success measurements are aligned with the client’s goals and priorities, rather than being exclusively benchmarked against investment performance. This frames clients’ financial strategies and our relationships with them around outcomes that are personally meaningful to them.

To what extent is this research important to you?

Anil Suri:

This research is fundamental to delivering a client-centric, goals-based approach to investing. We expect to use the insights developed in this body of work to explore more effective and efficient ways of providing retirement related advice and guidance to our clients. Specifically, we aim to use these insights to enhance investment solutions aimed at helping our clients navigate their retirement goals.

The main focus of the project conducted during the 2019–2020 academic year was to develop a comprehensive and flexible framework for providing personalized advice on individual retirement investment decisions. What are the most important points raised by this research in your view?

Anil Suri:

This body of work develops a framework to holistically assess the extent to which a given mix of investments chosen from a menu comprising stocks, bonds and certain annuities fulfils a client’s goals related to both income generation during retirement and any possible bequest.It highlights the trade-offs involved in achieving a satisfactory outcome for a given client by clearly incorporating their preferences, circumstances and goals. From an analytical perspective, the framework combines robust investment thinking with a computationally effective and efficient approach in a very compelling and practical way. Ultimately, this will helps us develop more specific and refined guidance across a range of investments to help our client’s achieve their goals.

The next research project will be to establish a personalized retirement investment and withdrawal decision framework and roadmap for an efficient individual/advisor dialogue. What are your hopes and expectations for this new research?

Anil Suri:

The question of how best to use one’s assets during retirement is a complex one that needs focused attention and expertise. A good response needs to be both analytically robust and broadly usable by individual investors.It requires one to make decisions in the present about how much to withdraw, and from which source, to meet current lifestyle needs while retaining the ability to fund future income needs despite fluctuations in the market value of investments held and uncertainty about one’s future health and lifespan. A good framework will also help illustrate these trade-offs to individual investors for their own specific situation so that they can make prudent financial decisions throughout their retirement. The goal of the current project is to develop and refine an analytically robust framework to address these issues.

About Anil Suri

Anil Suri, is a Managing Director and Portfolio Analytics & Investment Analytics Executive within the Global Portfolio Solutions Group for the Global Wealth & Investment Management (GWIM), a division of the Bank of America Corporation, Chief Investment Office (CIO). In this role, he leads the development of frameworks and solutions for asset allocation, portfolio construction, goals-based wealth management and retirement investing and is the lead portfolio manager on the Dynamic Asset Allocation Strategy. Previously, he managed the Portfolio Construction & Management and launched the Dynamic Asset Allocation Exchange Traded Funds (ETF) portfolios, led investment strategy for Alternative Investments (AI), managed Fund of Hedge Fund portfolios, and was a Senior Investment Strategist on the Merrill Lynch Research Investment Committee (RIC). Prior to joining Merrill Lynch, he was a senior AI strategist at Citigroup, high yield and distressed debt trader at Credit Suisse and management consultant at McKinsey. Anil’s research has been discussed in Barron’s and The Wall Street Journal and published in several peer-reviewed publications such as the Journal of Portfolio Management. Anil earned his M.B.A. with honors from the Wharton School of the University of Pennsylvania, an M.S.E. from Princeton University and a B. Tech. from the Indian Institute of Technology at Delhi. He also serves on the International Advisory Board of the EDHEC (Ecole des Hautes Etudes Commericales du Nord) Risk Institute in Nice, France.