Straight Talk

'Almost every financial plan that’s ever been written is wrong': United Capital's Duran

Key Points
  • Most financial plans incorrectly assume that you’re going to live an average life, said Joe Duran, CEO of United Capital.
  • These plans fail to account for individual biases and fears, which can adversely affect your financial decisions.
  • You’re not average; you’re unique. Investors should ponder the purpose and motivation behind accumulating money.
Your financial voyage

If you’ve managed to pull together a strategy for your personal finances, odds are it’s not the right one for you.

That’s because many financial plans fail to consider the unique characteristics of an investor’s life, including his or her biases and the fluidity of investing goals, said Joe Duran, founder and CEO of United Capital.

“Almost every financial plan that’s ever been written is wrong,” he said.

“It’s wrong because it makes two assumptions that are almost certainly wrong,” Duran said. “One is that you’re average, and the second is that the markets will be average, too.”

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These strategies fail to consider how you respond to stress, as well as the fact that your goals over the course of your lifetime will change.

Here are the questions you need to consider to make sure your financial plan is working for you.

What’s the end game?

Accumulating wealth shouldn’t be the only goal.

“The more of it you have, the more choices you have in your life,” Duran said. “But the question you need to be asking is, ‘What is it really for?’”

The motivation behind why you’re amassing resources will help you frame the context in which you spend and use money, Duran said.

This is also a key discussion to have with your spouse.

“It’s very important if you’re in a relationship that you both agree what it is that we work for,” Duran said. “This way, when you have decisions to make, you can agree that these are the values and the purpose for the money.”

What are the trade-offs?

Think about how your goals intersect with each other. There will likely need to be trade-offs on priorities, Duran said.

For instance, are you willing to spend today to remodel your house? What might that mean for other competing goals, such as saving for retirement?

“Constantly, there’s this battle between protecting and having a safety net and also doing the things you want,” said Duran.

How can your advisor help?

Your financial advisor isn’t just providing you with a game plan. He or she should also help you adjust your choices and goals along the way, said Duran.

View your financial plan as a living document and not a static blueprint for the next 30 years.

“We think, more than anything, the role of an advisor is to help you optimize your choices along the way,” said Duran. “It’s not where you get to, but it’s how you get there that really matters.”