42 INVESTMENT ADVISOR APRIL 2021 | ThinkAdvisor.comwrong and will they be OK if it goes asbad as they imagine it can end up being.
4. Get clients to control the fewthings they can control. “The mostimportant thing that I say to anyonewhen it comes to financial decision-making is check your emotions and focuson what you can control,” Duran said.
“You have no control over what thedollar does [or] what the stock market does. You don’t even havecontrol over really your rateof return,” he pointed out.
However, “what you can control is your risk,” he said.
“None of us know what’sgoing to happen tomorrow,” hesaid. “What we get paid for”as advisors is “to understandpeople and then to build a portfolio that [clients] are going tobe able to live with and makeappropriate adjustments along theway. 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 aboutwhat others are investing in. As aninvestor, “don’t worry about what everyone else does [because] you will neverhear from your friends about the lossesthat they had,” Duran said.
6. Learn your clients’ biases and getthem to understand them also. To getclients to understand their biases, thisquick exercise to figure out what theycare about most is useful, Duran noted.There are three buckets and the goal isto figure out which bucket to put moneyinto: To protect themselves, take care ofthe people they care about, or to enjoy life.
“The truth is 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 pru-
dent 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 “every-
one’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 also should 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 alignedwith their significant others. “Ourindustry is built historically by men formen and that’s a huge mistake,” according to Duran. All too often, the “non-financial spouse” is “often ignored inour industry because most of the peopledelivering the advice have been trainedto focus on money, investing and rate ofreturn,” he noted.
“But the reality is that the use of themoney is what everybody cares about,”he said. Vacations are important, forinstance. How supportive will the non-financial spouse be of a financial plan ifshe or he has no part in the conversationwith the advisor?
Spouses, among other things, mustagree what they want to leave for theirkids. “We need to be aligned about what’sit all about” and choose between leavingmore money for the kids or taking morevacations 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 pan-
demic is a “polarizing event”
that everybody is experienc-
ing 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 hec-
tic life to ask yourself what do I not want
to bring back when the world reopens.”
9. Encourage clients to prepare formore volatility. There will be morevolatility and clients should be prepared for that, according to Duran.“There will be overreactions on bothsides [and] the answer is to not react,”he said. Also, “make sure you’re participating and that your overall risk isfine regardless if we go through a 15%decline somewhere in the next year,”he added.
“This is a great time to sit with youradvisor and [ask] ‘Am I OK if the markets fall 20% from here so that you’reready,” he suggested. “I call it the lifeboat drill. How much water is your boatwilling to take on before you say ‘I’ve gotto get out and start swimming?’”
Jeff Berman can be reached at jberman@alm.com.
RETIREMENT PLANNING
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.”
—Joe Duran
