By opening up honest conversa- tions with their clients, advisors can help them gain clarity abouttheir financial intentions and commitments for them to take the first stepstoward living the lives they want, according to Joe Duran, head of Goldman SachsPersonal Financial Management.
In a recent Goldman Sachs PFMPrivate Roundtable discussion called“Get Personal and Have an HonestConversation,” Duran provided several
1. Figure out what really matters
to clients, what’s driving their moti-
vations 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 themistake that investors make most.The biggest mistake investors tend tomake is “your time perspective and youremotional 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 priori-
ties,” he noted.
Clients must understand that investment decisions that look good today“can also go bad,” he explained, so it’simportant to ask whether it is worthmaking a decision that can significantlyimpact the wealth they have built. Onething to keep in mind: “The pain of losing is much worse than the enjoymentof gaining.”
3. Get clients to start looking atmoney as “fuel.” The way to thinkabout money is that it’s a resource thatallows investors to do things, and “whatyour job is as a human is to optimizeyour decision-making,” Duran said.
Therefore, clients should ask themselves before making a potentially riskyinvestment decision if they are calm,if they have put it into perspective, ifthey have thought about what could go
Joe Duran: 9 Ways to Help Your Clients
Live Richly Instead of Dying Rich
Here’s how to help clients live the lives they want, according to the headof Goldman Sachs Personal Financial Management.
By Jeff Berman