March 20, 2018
Paul Nikolai’s interest in investments and the economy started early, albeit somewhat by osmosis.
There was only one color TV in the family when he was growing up. So when he wanted to watch the ball game on Friday nights, Paul had to wait, patiently, until his father’s favorite program, “Wall Street Week with Louis Rukeyser” on PBS, was over.
“I’d kind of hover over my dad’s shoulder watching the show,” said Paul, who today is a director in investment advisory and principal at Aspiriant. “That’s how I learned about investing.”
Later, he got a first-hand view of the importance of sound financial planning.
His grandfather worked for General Motors for 40 years and earned a decent pension. Unfortunately, he got bad advice on how to receive it. Because Paul’s grandmother’s health was poor, everyone always assumed that his grandfather would outlive her. So he took a “life only” option to receive the benefits, meaning payments would continue for the remainder of his life only, rather than “joint life” where payments continue until the death of the second person. Unfortunately, Paul’s grandfather died first, ending payments to his wife. Her last seven years were difficult for the whole family as Paul’s mom, aunt and uncle had to help his grandmother get by financially.
In contrast, Paul’s dad, a scientist for the Department of Defense, and his mom, a school teacher, were able to retire in their 50s because they planned well. (No doubt, all that “Wall Street Week” watching was helpful, too.)
Witnessing his family’s contrasting examples propelled him into the financial services field. In college, he earned a Bachelor of Arts in Economics & History at Miami University and a Masters of Business Administration at Xavier University in Cincinnati. During his career, he spent 13 years at Deloitte Investment Advisors.
Paul joined Aspiriant when Deloitte Investment Advisors merged with our firm in 2010. Today, he’s the practice leader in our Cincinnati office, advising clients in 17 states. He previously served on Aspiriant’s Management Committee and Investment Committee.
Throughout his nearly 30-year career, Paul has served clients with one main guiding principal: “I would never provide advice, solutions or guidance that I wouldn’t provide my parents.”
Today, Paul talks about the importance of creating a trusting relationship with clients and always acting in their best interests.
Your parents were financial role models for you. Besides getting good advice and working hard, what do you think were the keys to their success in retirement?
My dad was born during the Great Depression, so saving was important to him. They paid themselves first, that is saving monthly as if it were a bill, and put money away early on so my sister and I could go to any school in the country.
And they lived within their means, in a nice house but not a mansion. They didn’t take extravagant vacations. They didn’t accumulate a lot of debt.
What I learned from my parents is it’s what you keep, not what you spend. I saw firsthand someone do it right and somebody do it wrong.
When it comes to investing, how do you go about creating clarity and peace of mind for clients?
It’s a process that keeps evolving. You need to translate investment information to the client, make it easy to understand and applicable to their lives. It’s a balance of left brain vs. right brain as everybody’s different. An engineer, for example, may prefer to get granular details, while others like the broader picture presented in a way they can relate to. Just like any field, you never stop learning. It keeps you sharp to always look for better ways to teach a client.
You also need to be very good at listening. What is the client looking for? What’s most important to them? With some, you need to do a deeper dive so you can really understand their needs, find the right information, and present them with solutions that work best for them.
Sometimes it takes a client a little time to trust you because problems created in the past can’t be fixed overnight. That’s why it’s important to be a fiduciary, always looking at the client’s best interests.
What do you say to skeptics who have their own strong personal beliefs about investing and making money?
I sit down with them and explain I’ve done this for a long time. I tell them, if you want flash, if you want shiny, happy, super expectations, I’m probably not the right person for you.
I remind them that they achieved their wealth, and however they did that, my job is to preserve that wealth. They don’t need to take a lot of risk to reach their goals. They’ve got what they need. What they can’t do is lose 30% to 40% of their assets by swinging for the fences.
I demonstrate how a diversified portfolio works. The more baskets for their eggs, the better off they are. If they have investments elsewhere, I don’t want to double up on what others are managing.
How do you manage emotions during periods of market volatility, as we’ve seen since early February?
I feel I must be doing a good job teaching diversification because I really have not received many calls from nervous clients.
I’ve been telling people all along that we haven’t had a correction in two years, and we’re due for one. We’re planning for that to happen in the way we manage client portfolios. And if one doesn’t occur, well then, everyone is still in pretty good shape.
I typically advise clients to get cash at the beginning of the year for their estimated expenses. And if the markets fall, we can access other assets, if needed, while we let stocks rebound.
How do you help people think about their wealth and their options?
I try to put things into context and help them figure out where they are on the wealth curve. I go in and ask them a lot of questions. Are they pragmatic? Are they a big spender? Do they want to give to philanthropy? It’s a matter of how they program themselves.
I may have one client with a 12-year-old car who asks if he can afford to buy another car. And I can tell him, yes, you can buy one for every day of the week if you want. You can still spend this money even if you take your last breath at 100 years old.
In contrast, I have clients whose peak earning years were in the 1980s. They buy a lot of nice cars, large homes. Some I caution that they are burning through their money, and they insist, “We’re not going to live very long.” Others later realize it wasn’t such a great idea to buy that second home.
People’s visions for their future can change. I need to prepare them for that. They may think that they’ll do all these things when you retire, like travel around the world and golf every day. But then they come to realize what’s most important is spending time with their family and taking care of their future.
I have one client in her 80s who just started giving away six-figure gifts to charities. She decided she’d rather do that today while she can see the benefits of her donations. It brings her a lot of joy now.
Everyone is a little different. My focus is to understand what drives them.
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