Have you read Robert Cialdini’s book Influence?
Great book. I re-read it over Christmas.
It reminded me of the influential ‘short-cuts’ in our lives. Those psychologically engrained triggers we each develop that either warn, encourage, hinder or help us quickly make sense of what’s going on in our complex lives.
Cialdini frames some of his discussion around what he calls ‘compliance professionals’ – the biased salespeople, advertisers, politicians, or family who spark the short-cuts that automatically guide our response even when they can act against our own interests.
Common powerful short-cuts include the fake laughter on TV shows, the familiarity with existing relationships and providers, the titles respected by our peers, the purchases our social network consider cool, the scarcity of so-called once-in-a-lifetime offers, or the guilt obligations conveyed with gifts.
Considering the long shadows cast by last year’s banking royal commission over financial services, early 2019 is an opportune time to reconsider our short-cuts we use to determine the value of advice.
I reckon there are three different elements of value of financial advice.
The most important of which is the element of discovery.
Advice is Discovery.
Without a discovery, advice is often just more information or another product recommendation.
At the very least, valuable advice could be a confirmation of current thinking. There is obvious value in having our intents confirmed.
Ideally, the discovery element of advice is more than confirmation.
Advice as a discovery changes the beliefs which may have swept us along our past financial paths enabling us to reflect and identify where past progress may have been more circular than straight.
Valuable advice quickly provides the sunlight on our ‘short-cuts’ needing closer examination as to how they may or may not have served us. Thinking such as “I’ll do it myself” or “I just don’t have the time right now” or “I’ve been meaning to do something for some time” or “Everything will be OK” or “I’ll handle it when I have to” or “property returns are shocking” or “Brexit and Trump will cause a global recession”.
Valuable advice that helps us discover new insights only dents, changes or challenges our former short-cuts and perspectives when those new options or choices clearly have merit for our own best interests. Value is like quality. We know it when we see it.
Valuable advice helps us re-examine our assumptions and associated short-cuts for potential new discoveries.
My doctor doesn’t assume last year’s blood tests are good enough this year, she insists on new ones to potentially discover anything new or untoward. Even if nothing is hopefully found, the discovery process is still of value.
Likewise, valuable advice isn’t based upon assumed hopes, dreams, fears, balance sheets, asset allocations, relationships, or spending habits as all of which in some way have inevitably changed enough for a trained, trusted and objective expert to help us discover the new implications needing attention or decisions.
Valuable advice can help us discover different or changing financial truths about those who matter to us, and facilitate the often difficult but needed conversations to best ensure meaningful and collaborative outcomes can still be achieved and not hijacked by the heat and pain of understandable emotions.
A Ralph Waldo Emerson quote “our chief want in life is to someone who can make us do what we can” is potentially less about the wisdom from others, but a realisation that being open to objective discoveries about our current thinking, biases, paradigms and short-cuts might be a valuable step towards our own progress.
There’s another element to valuable advice.
It saves time.
The more, the more valuable.
Fretting away our lives
Valuable advice reduces or ideally significantly addresses any tendency to fret away our lives.
Survey after survey confirms we all feel burnt out, have too much to do and don’t have enough hours in the day to do everything. Our bookshelves provide proof enough – Overworked And Overwhelmed, How To Stop Worrying And Start Living, Fried.
Worse still possibly is the stuff we fret about is often not even ours but the desired details of lives of others.
The lives of others too easily become our hopes as we long for lives like theirs, or their cars, or bodies like them, or own houses like them, or their social networks and lifestyles – the short-cuts suggest it’s not too much to ask?
It’s hard enough to chase what we genuinely seek when the attention economy gorges us, grabs our eyeballs via the handhelds welded into our grip. Those teams of marketers and logarithms on the other side of trusted screens or Siri are constantly figuring out how to increase our focus on what they want rather than what we uniquely might have been put on earth for.
We’re attuned to others stealing real-life possessions but seem immune to others stealing our attention.
We may not like it, but a tell-tale of valuable advice is the discomfort it presents. Engrained habits that mean we never really have to pursue the re-hashed set of new year’s resolutions are ideal for a status quo with less commitment and more talk. Or as my mum used to say, more show than go.
Valuable and potentially at times begrudging advice, can be an invisible hand pushing or pulling us through the entrenched habits, paradigms and mindsets built by years of short-cuts that hinder us living the life we once believed in or still quietly pine for.
The attention economy is not as interested in our best interests as they are in promoting the people paying for their services. They don’t really care about changing our lives for the better as much as they care about their stock prices, profitability, growth, and valuations.
Don’t get me wrong.
The advertisers, marketers, product and service providers, tech firms are just doing their jobs. They are important players in our daily lives providing some value. I refer to their value as ‘Knee Surgery Value’.
Knee Surgery Value
Knee surgery value is the third version of value.
It’s the value provided by knee surgery when you actually need your knee fixed.
It’s the value provided by a real estate agent when you’re looking to buy or sell property.
This is the value of advice when you’re faced with an event (i.e. you need to relieve your knee pain and regain your mobility) and you don’t have the expertise, or skill, or experience, or time, or ability to address the issue.
Life’s events and transitions provide deadlines which most of us can’t ignore.
To date, the vast majority of the financial services industry has been an ‘event-based’ industry providing knee surgery type value.
When you need to handle an event when your money will be ‘moving around’ such as your impending retirement, or the respectful care for an aging parent, or the financial support of a growing family, or the death of a loved one, we seek value from the experts.
How should I invest? Should I buy blue-chip, tech stocks or emerging nations?
How should I structure my financial life or manage my risks to best handle the uncertainties of current events or transitions being faced?
Knee surgery value is the value of event-based advice. It will usually have valuable outcomes.
However, as highlighted by the Royal Commission, the shortcuts engrained in how we’ve purchased financial advice has not only been event-based knee surgery type value, the payments are on-going. Financial advice providers have assumed on-going value to you is based upon past events.
The knee surgeons don’t continue to charge us on-going in subsequent years.
Why do our financial services experts presume the on-going value is based upon past year’s events?
Good question. It’s just the short-cuts we’re used to.
Whether the value is a discovery or the steps to avoid wasted time or a capability needed to overcome the events in our lives, only we can ascertain the value of advice for us.
Value of advice is much more than a traditional financial product.
At its best, advice paves our best path to virtuous objectives.
But even at its worse, the value of advice provides progress through inevitable events and times of uncertainty.
Beware the post-royal commission hype dressing up the value of old offers with new thin veneers.
Only you can determine the value of advice.
What do you reckon?