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Joe Duran: 9 Ways to Help Clients Live Richly Instead of Dying Rich

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By opening up honest conversations with their clients, advisors can help them gain clarity about their financial intentions and commitments in order for them to take the first steps toward living the lives they want, according to Joe Duran, head of Goldman Sachs Personal Financial Management.

Kara Murphy, PFM chief investment officer, on Tuesday kicked off a Goldman Sachs PFM Private Roundtable discussion called “Get Personal and Have an Honest Conversation” by noting Duran had often told her, “We want to shift our focus away from dying rich to how do we live richly.”

Duran went on to provide some good tips advisors can use to help their clients. Nine that stood out are:

1. Figure out what really matters to clients, what’s driving their motivations and why they work.

If clients don’t answer that question, they can “make a lot of mistakes along the way” for reasons that include the advisor not having a “lens” on when to point out “there’s a discrepancy between what” the client is saving that matters to them and “what’s being done today with [their] money,” Duran said.

2. Help clients avoid making the mistake that investors make most.

The biggest mistake investors tend to make is “your time perspective and your emotional biases … cloud your decision-making,” according to Duran.

As humans, “we are naturally drawn into what we’re experiencing right now and feel the need to act … because every financial decision is emotional” and “every investment decision is a conflict between the fear of losing out and the fear of losing money,” he noted, likening it to a “tug of war.”

However, “the minute you’re feeling emotional, your decisions are going to be almost the opposite of exactly what you should be doing when it comes to investing,” he warned.

It is important to step back and have an advisor provide “a sense of perspective on time and priorities,” he noted.

Clients must understand that investment decisions that look good today “can also go bad,” he explained, so it’s important to ask whether it is worth making a decision that can significantly impact the wealth they have built. One thing to keep in mind: “The pain of losing is much worse than the enjoyment of gaining.”

3. Get clients to start looking at money as “fuel.”

The way to think about money is that it’s a resource that allows investors to do things, and “what your job is as a human is to optimize your decision-making,” Duran said.

Therefore, clients should ask themselves before making a potentially risky investment decision if they are calm, if they have put it into perspective, if they have thought about what could go wrong and will they be OK if it goes as bad as they imagine it can end up being.

4. Get clients to control the few things they can control.

“The most important thing that I say to anyone when it comes to financial decision-making is check your emotions and focus on what you can control,” Duran said.

“You have no control over what the dollar does [or] what the stock market does. You don’t even have control over really your rate of return,” he pointed out. However, “what you can control is your risk,” he said.

“None of us know what’s going to happen tomorrow,” he said, explaining: “What we get paid for” as advisors is “to understand people and then to build a portfolio that [clients] are going to be able to live with and make appropriate adjustments along the way. That’s what a good advisor does. They’re helping [clients] to optimize [their] decision-making.”

Advisors should tell their clients to manage their costs, taxes and risks because when it comes to investing, those are the things they can actually manage, according to Duran. Beyond that: Be diversified, don’t do anything silly and “don’t make mistakes” that end up in the loss of “substantial amounts of money,” he said.

5. Tell clients not to worry about what others are investing in.

As an investor, “don’t worry about what everyone else does [because] you will never hear from your friends about the losses that they had,” Duran said.

6. Learn your clients’ biases and get them to understand them also.

To get clients to understand their biases, this quick exercise to figure out what they care about most is useful, Duran noted. There are three buckets and the goal is to figure out which bucket to put money into: To protect themselves, take care of the people they care about, or to enjoy life.

“The truth is in order to really be satisfied with your financial choices, you need to fill all three buckets,” he explained. “You need to protect [money] because that’s the prudent thing to do. You need to enjoy because … you don’t know what’s going to happen tomorrow and you need to have enough to take care of your commitments.”

“Our job first” as advisors “is to understand your biases and then second, how do we articulate why you work, your priorities,” he said. While “everyone’s goals are constantly changing,” he said: “The number one priority across our 25,000 clients is… I want to spend time with people I care about.”

Advisors should also make sure when they are making goal adjustments with clients that they’re in line with the things clients say matter most to them, he said.

7. Make sure clients are aligned with their significant others.

“Our industry is built historically by men for men and that’s a huge mistake,” according to Duran. All too often, the “non-financial spouse” is “often ignored in our industry because most of the people delivering the advice have been trained to focus on money, investing and rate of return,” he noted.

“But the reality is that the use of the money is what everybody cares about,” he said. Vacations are important, for instance. How supportive will the non-financial spouse be of a financial plan if she or he has no part in the conversation with the advisor?

Spouses, among other things, must agree what they want to leave for their kids. “We need to be aligned about what’s it all about” and choose between leaving more money for the kids or taking more vacations now, as examples, he said.

“The biggest challenge we see is that a lot of our net wealth is going to be given to the siblings and to the kids because of … huge sacrifices” that may not have been necessary, he noted.

8. Encourage clients to chat before the pandemic ends.

The COVID-19 pandemic is a “polarizing event” that everybody is experiencing differently, but that is true of every major crisis to some degree, according to Duran.

Many people are returning to doing the things that really matter to them and this is a great opportunity to “reassess what are the things I don’t need to bring back to my life” after the pandemic is over, he said. He encouraged people to “take the time now before we get back to our hectic life to ask yourself what do I not want to bring back when the world reopens.”

9. Encourage clients to prepare for more volatility.

There will be more volatility and clients should be prepared for that, according to Duran. “There will be overreactions on both sides [and] the answer is to not react,” he said. Also, “make sure you’re participating and that your overall risk is fine regardless if we go through a 15% decline somewhere in the next year,” he added.

“This is a great time to sit with your advisor and [ask] ‘Am I OK if the markets fall 20% from here’ so that you’re ready,” he suggested. “I call it the lifeboat drill. How much water is your boat willing to take on before you say ‘I’ve got to get out and start swimming?’”

(Pictured: Joe Duran, head of Goldman Sachs Personal Financial Management)