FEATURE — When someone learns that the person they just met is a doctor, it is not uncommon for them to roll up their sleeve and say, “Well hey, doc, since you’re here can you take a quick look at this thing?”
All doctors reading this know exactly what I’m talking about. As a financial advisor, I often run into the same situation with the question being some form of, “Hey, since you are a market expert, if I gave you $100,000 to invest, what would you do with it?”
Most doctors answer the question by suggesting the individual make an appointment to see them in their office. They understand that the proper practice of medicine involves understanding all the facts. I usually answer the question by turning it around and asking the person about their career.
If he says he is an architect I would reply, “That’s wonderful, we have been thinking of building a new house. If I had you design it what would it look like?”
He would usually laugh a little and reply that it would be impossible to answer such a question without a lengthy discussion about my family, our lifestyle, our budget and our wants and needs. He would add that he often spends weeks with people methodically working through many questions before even beginning to put anything down on paper.
At this point in the conversation, I will generally say, “Well then you understand why I can’t recommend how to invest your money when I just barely met you.”
I have been present when other financial advisors were asked a similar question and, anxious to appear intelligent, answered it in great detail. These situations took me back to when I was first learning the business in my youth and my dad warned me to “beware of the 30-second expert.”
There are few things in life more critical than good management of financial resources. The success and very survival of businesses, families, marriages and individuals depends upon it. Like designing a home, solving a medical issue, or creating a great work of art, it takes time.
On a personal level, we all need to recognize the risk of becoming our own 30-second expert. I know many investors who after reading an article or a social media post rush to buy some investment. For fear of missing out, they move too quickly before doing proper research. Rarely do such rash decisions turn out well. Opportunities for investing always exist so there is never a need to rush into anything.
If you are tempted to invest without proper thought, take a deep breath. If you see a social media post or read an emotional investing article, slow down. Likewise, if an advisor offers you advice on how you should invest without thoroughly understanding your situation, it is clear evidence they are not qualified to be giving financial advice. Or, they are one of those advisors who give the same advice to everyone, which is even more dangerous.
In our world of social media, we have become surrounded by 30-second experts. Don’t listen to them and as it relates to your money, don’t become one. If you do, you may find your money flees from you with the same speed at which you invested it.
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