Here’s How This $2 Billion Convertible Bond Expert Is Protecting His Client Assets For The Next Downturn

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Michael Miller has always had a passion for finance and turned that into a career as a financial advisor, the second generation of his family to go into wealth management.

However, early in his career he was trepidatious about how much of his fathers footsteps he would follow. Rather than joining the family business, Wellesley, Massachusetts-based and eponymous Wellesley Asset Management, Miller spent his first years out of college at Convergent Wealth Advisors. Catering to the Washington D.C. market from an office in nearby Potomac, Maryland, he speaks highly of the formative experience where he got his start managing money catering to the ultra affluent with a focus on professional athletes.

After nearly five years, the New England native returned to get his MBA at Babson College and to work for the three decade old firm his father, Greg Miller, had founded. Boston area roots drew the boating and fishing enthusiast back.

The family enterprise started as a family office with an ethos of “protect first, grow second” and as a convertible bond specialist. Since joining he has taken on the role of president and chief investment officer with his father serving as CEO and portfolio manager as well as holding the distinction of founder. Both father and son are Forbes Top Advisors.

The convertible bond asset class that Miller and his firm specialize in is a 200-year-old asset class that dates back to railroad issuance in the 1800s. Dealing specifically with “high quality domestic corporate bonds” works well in various market types, according to Miller. 

“During bull market years, our strategy is able to spit out very strong double digit returns. But in bear market years our strategy has positive returns those years as well,” he says. “The market can absolutely crash tomorrow and my clients are in short and mid-duration, high quality bonds. If this bull market lasts for three or four years, my clients have equity like returns through a principal protected investment.”

In his time with the firm, dating back to 2008, it has grown from about $100 million to its current $2.2 billion in assets under management, largely growing from the decision to take outside clients, with a typical household accounts currently ranging from $1 million to $1 billion.

“I don’t want to take outsized credit but when I joined, that’s when we began the process of taking outside money,” Miller, 37, says. “I came into a very small family office setup with $100 million-plus dollars and in two to three years we were able to add a zero to our assets under management.”

Younger than many of his colleagues across the industry, Miller says the reason that the financial advice business has had trouble attracting a new generation of talent is that it can be so challenging for a 20-something year old to approach an older person that has accumulated wealth and say they want to manage their money.

Wellesley Asset Management started when Miller’s father sold an ultrasound company and wanted to ensure he was able to protect his newfound wealth. Both his father and grandfather were entrepreneurs who sold businesses and invested in the market only to be “wiped out” by the Great Depression and malaise of the 1970s, respectively.

“The word protect always comes first because that’s what we find leads our clients to the most success over decades,” Miller says. “We’re not chasing returns or trying to beat the S&P 500 or beat these imaginary benchmarks as much as really achieving our clients financial goals.” 

After the market drop in March, many in financial services were surprised to see markets up most of the rest of the year. For Miller, there are two sides of the coin for what he sees up next for the markets.

“There’s a light at the end of the tunnel with vaccines coming out. With the stock market, there is a lot of optimism but I’m a little bit more pessimistic,” Miller says. “There’s been a lot of artificial propping up of the market with what the Fed has been doing as they try to stave off a recession. I can’t sit here thinking that this pandemic was great for the market but yet it went up. Maybe all the optimism is priced in that that 2021 and 2022 will be back to normal, but I’m cautious.”

In the aftermath of the longest-running bull market in modern times, Miller wonders where more growth can come from in 2021 if much of the year has already been priced in. “I want to know where that additional growth can come from,” he adds.

Miller believes firmly in his firms conservative approach, saying that investors have short memories, desperately seeking protection during downturns but seeking double digit returns during bull markets. He tries to focus his management on longer term results rather than chasing the market up and down. That has never been more clear than in the volatile last 12 months that have been defined by Covid and shutdowns.

In the aftermath of an unprecedented year, Miller says he was impressed by the industries resilience in being able to continue to make markets and bring new products to markets. He also learned lessons that were beyond the managing of money.

“I realized in 2020 that we have to be citizens of this country and the world,” Miller adds. “It’s a tumultuous time in American politics and we have to be sensitive to that, in an investment-advisor and a psychologist role. It was an eye-opening realization for us not just to say ‘What’s the best convertible bond out there?’ but ‘What are we going to do as this political climate shifts?’”

Trying to pay his dues and avoid the “heir apparent” label has been easy for Miller by being the firm’s fifth hire with plans for a 50th hire in the offing.

“I didn’t want to come into doing this unless I thought I could add significant value, so I wanted to learn somewhere else and come here being able to add value and bring a different perspective which led to me saying that we can pursue outside money through the RIA channel. I certainly would not have been able to do that had I just come directly here.”