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The Great Reset: Rethinking Your Financial Life in a Pandemic

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On March 19, the day Gov. Gavin Newsom gave the order for Californians to shelter in place, even the takeout Thai food we ordered from Bamboo Bistro in Corona del Mar seemed unusually prescient.

“Adversity is the prosperity of the great,” read the fortune cookie at the end of the meal.

The upheaval of the past several months has shaken all of us. “Quarantine,” “social distancing,” and the over worn adjective “unprecedented” have become part of our everyday lexicon.

After the initial panic and rush for emergency supplies, the real impact of a global shutdown and weeks at home are settling in. Across the world, many of the usual distractions and ways to spend our leisure time have been disrupted.

For our family, that has meant no Fashion Island, no shows at South Coast Repertory, no Angels games or even volleyball with friends on Laguna Beach. (Apparently, this doesn’t apply to people with the good fortune to own boats, see photo). Instead, we have all had the time to reflect on everything from our daily habits to our daily commutes on the 55 Freeway or PCH.

We’re asking ourselves, “Does this still make sense? Is this still useful to me?”

As a society and as individuals, we’re challenging bedrock assumptions we’ve made about the way we live our lives.

We won’t come out of this pandemic the way we went in.

A Reset of Priorities

At our firm, we’ve called this COVID-19 era “The Great Reset.”

Think of how sheltering in place for weeks with your families (in my case, three daughters, a puppy and a parakeet) coexisting under a single roof has changed how you have meals, watch movies, exercise, engage with friends. We are now interacting with the world in new ways that have settled in.

As much as many of us want to “get back to normal,” we can’t un-ring this bell, and the Great Reset has huge implications for our financial lives too.

The things we value form the basis of our financial plans. If this crisis has changed what you value and want to prioritize, is your financial plan still relevant? A financial plan needs to incorporate your personal tradeoffs and how you might now prioritize time with your family over travel or career goals. Think beyond your money, it’s just fuel.

How do you want to use that fuel? Do you and your financial adviser understand the “why” behind your goals, and the adjustments that need to be made to reflect your evolved perspective about your future?

Anticipating Risks

A record-setting bull market has come to an end after an incredible 12-year run. Hopefully, you were prepared for the pullback. The emotions and knee-jerk reactions that kick in when risk becomes reality can only be overcome with discipline. But I doubt many of us could have imagined the suddenness and extent of the upheaval we have experienced this year.

We all have had to rethink our safety net. How much is really enough for you if the entire world shuts down for an extended period of time. Over the past few months many businesses have preemptively drawn on their available credit lines just in case.

On a personal level many of us are realizing we might need to have a bigger cushion than we considered before, especially if we have more shocks to the system. Financial plans need to reflect that increased need for protection.

It’s not the markets that matter. It’s what you do that really impacts your life.

It’s helpful to remember that you only have control of five things when it comes to your financial life: How much you spend, how much you save, how much of a safety net you want, the risk you are willing to take with those savings, and lastly the timing of major events (when you retire for example).

When facing uncertainty, go back to the things you can control and focus on those, the rest are a distraction.

The Connected World Adapter

About disruption: How many of us have seen our tech-phobic parents and grandparents take to video conferencing with a zest that makes our heads spin?

How many entrepreneurs do you know who have sworn up and down that remote work would cost productivity and dissolve their company culture, but are now changing their tunes, as Silicon Valley leads the charge into a likely permanent tilt to telework?

The pandemic has been an accelerant to many of the changes that were already happening in our world. The past few months have forced us to adopt video-based tools, but they have also opened eyes to new possibilities. It was not so long ago that many financial advisers dismissed this technology as a nice-to-have, or maybe a way to connect with younger clients sometime in the future. Well, the future got here a lot faster than we thought it might.

The world is now bending to your convenience, almost everything in the world can come to you if you have a mobile device. That is true of how you buy groceries or how you will receive medical or financial advice. Businesses of all stripes have seen the awful cost of not being mobile and digital ready.

Weeks of isolation have forced us all to renegotiate what we want in our lives. We should lay the same challenge before the people who help guide our financial lives, too. Advisers don’t have all the answers—we leave clairvoyance to fortune cookies. But a good, truly indispensable adviser is someone who can help you find the right questions to ask yourself and provides the discipline to help you live as closely as possible to the life you want.

Editor’s Note: Joe Duran, CFA, in 2005 founded Newport Beach-based United Capital Financial Advisers, which he built into one of the nation’s largest registered investment advisers with $25.7 billion in assets under management. His firm was purchased last year for $750 million by Goldman Sachs, where he is now head of personal financial management. Follow him on Twitter at @DuranMoney.

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