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Joe Duran of Goldman Sachs Personal Financial Management

Industry Spotlight > Advisors

Joe Duran: What Investors Need From Financial Planners During Tough Times

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What You Need to Know

  • Data from a new Goldman Sachs survey suggests a great number of Americans are feeling sandwiched by competing financial priorities.
  • At the same time, individuals at all stages of life say they are more open to working with financial professionals to help create more financial resilience.
  • Proper planning requires humility and an acknowledgement of the unknown, Duran says.

In the experience of Joe Duran, head of Goldman Sachs Personal Financial Management, the value of a solid financial plan is hard to overstate, especially during difficult times in the markets.

Those with a plan, Duran says, are far less likely to make rash and emotional decisions with their portfolios and are generally more successful in achieving financial wellness and independence over the long term, even when they have to face life’s biggest challenges.

Duran offered his perspective during a media call convened to preview the firm’s newly released 2022 Goldman Sachs Asset Management Retirement Survey Insight Report, which focuses on the struggles facing U.S. workers as they strive to prepare for retirement in a world increasingly devoid of traditional pensions.

The survey shows U.S. workers are fretting higher market volatility, the prospect of lower returns in both bonds and stocks, and the impact of prolonged high inflation. At the same time, individuals at all stages of life say they are more open to working with financial professionals to help create more financial resilience.

Data from the survey suggests a great number of Americans are feeling “sandwiched” by competing financial priorities, especially older millennials and members of Gen X. Many people in these generations are raising kids while also caring for aging parents, putting both time and monetary strains on even those of substantial means.

“It’s a challenging financial vortex for individuals to navigate,” Duran says.

A ‘Precarious Moment’  

Top concerns highlighted in the survey data pertain to the solvency of Social Security, rapid inflation in health care costs and uncertainty about what greater longevity means from a financial perspective. Concerns across these and other areas have all jumped meaningfully since the 2021 edition of the survey, Duran notes, showing just how difficult the last year has been for many people.

“The data shows us we are clearly in a precarious moment,” Duran says, adding that such an environment elevates the importance of financial planning. “People across the board want more advice about saving and generating retirement income — and understanding how long their savings might last, especially in the context of high inflation.”

Duran says the growing desire for personalized, tailored advice shines through basically all the findings in the new survey report. According to the survey, essentially all current workers say they could benefit from greater access to advice and support services from planning professionals.

“We know that a sense of financial control and clarity are essential, but these are so difficult to create on your own,” Duran says. “These are the things a financial plan can address. A plan helps individuals understand their current position and generate that higher level of clarity about what may come next.”

Seeking Clarity and Control, Not Perfection

Duran emphasized that no advisor, no matter their skill and dedication, can predict the future. At the same time, no client can make perfect decisions all the time. Fortunately, that’s not what a good financial plan seeks to accomplish.

“What we can do is use forecasting and scenario analysis that can put your clients in the best position possible for financial success,” Duran says. “The outcome of a good planning process should be that deeper sense of clarity and control.”

Duran says successful financial planners are already engaging with their clients about the aforementioned areas of concern and are helping them to understand what levers they can pull to put themselves in the most optimal position during what is clearly a difficult moment.

“Your typical client with a balanced portfolio has now gone through a roughly 20% decline in their accumulated assets,” Duran observes. “First of all, the financial professional can help ensure that there are no ill-timed flights to cash that lock in these losses, but that’s only part of the response to this moment.”

Duran points to the example of a client that has not yet retired but was planning to do so soon. Rather than allowing the client to dwell on the unfortunate nature of sequence of returns risk, the advisor can bring to the table some calculations that show the client can make up most of the lost ground by working for another year to 18 months.

“You can show them how they can pull levers they can control that will put them back in the position they would have been in before the market decline of the last year,” Duran explains.

A client who has already retired, on the other hand, may need to reduce their spending by 10% for about four years to make themselves “whole” again, Duran says. This isn’t going to be easy for most, if not all, clients, but it is an actionable plan.

“A good financial planner will walk people through this and help them understand that they can respond to this moment constructively and without making some panicked move towards protection,” he adds.

No Magic in Planning

Duran says financial planners must also be humble and understand their own limitations. For example, no financial planner can craft a comprehensive retirement plan for a client who may only be in their 30s.

“We simply don’t know enough about what this person’s future holds to be able to have a constructive conversation about retirement income, for example,” Duran says. “What we can do is refocus the discussion and instill financial discipline that will help this person throughout their savings journey.”

The planner can help these younger clients understand the importance of compounding and tax-advantaged savings, Duran posits. They can also help their clients understand the importance of investing in themselves via work and education.

“Things change when the client establishes a family and reaches more of the middle of their career,” Duran says. “Only at those later stages, say by your middle or late 40s, can you actually envision your potential retirement situation with any degree of accuracy. That’s why planning happens over time.”


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