Careful who you ask
Some comments on advice are laughable.
Some of the biggest mistakes in the realm of financial advice are often made not by complete novices, but rather by those who think they have a sufficient understanding.
It is crucial to recognise that information does not exist in isolation; to truly unlock its value, one must comprehend not only the information itself, but also how it fits into the broader context. This principle applies to all aspects of life, including finance.
Curiosity piqued, I occasionally find myself scrolling through social media platforms like Facebook and Reddit, where it doesn't take long to stumble upon someone desperately seeking financial advice. Intrigued by their pleas, I peruse the responses they receive. Some replies are excellent, hitting the proverbial nail on the head and offering succinct guidance to steer these lost souls. Then the replies come: what do you mean by this? what does this acronym mean? The best advice if not understood and contextualised means very little.
The second part is the execution and the where, how, huh…
And if this is what a good answer can accomplish, one can only imagine the detrimental effects of a bad response—pushing those who genuinely require assistance even further away from taking action, leaving them stranded amidst increasingly murky waters. Seek assistance, often times you’ll find yourself much better off.
Which leads me to the crux of this article, seeking advice from sources that have some or no understanding of an industry, one finds this often with the success bias - seeking advice from seemingly successful people, just because someone’s success translates to financial gain, this does not automatically endow them with the knowledge about all things financial, just like, if you had a medical problem or qualm, you would seek out the advice of a doctor or specialist, not your wealthy uncle.
The same goes for financial planning.
A common argument against seeking advice from a financial advisor is the potential costs involved. It is true that some brokers may charge the maximum regulated commission on products, while others do not.
However, even when accounting for fees, clients who engage with brokers or financial advisors often find themselves in a more advantageous position than those who go it alone.
This is due to the fact that even though one can attempt to navigate the financial landscape alone (even factoring in the significant amount of time it takes to educate oneself and, most importantly, stay informed ), small mistakes and oversights can prove costly in the long run. Why not task someone whose mission it is to stay abreast, and informed. Most advisors diligently adhere to rigorous Continuous Professional Development (CPD), investing more than 60 hours per cycle to enhance their knowledge and skills, for some this is the minimum. This commitment ensures that they remain up-to-date with the ever-evolving financial landscape and can offer informed and relevant advice to their clients.
Seek out an independent advisor and have a chat with them, it is important for you to get someone you feel comfortable with, who has your interests at heart. The value of advice done right is a game changer.
At Fractal Capital, we believe in the power of transformative advice.
