REWRITING THE LAWS OF PRICING ADVICE
“The objective of financial advice is to maintain a state of balance for each client on their unique financial path while managing: their financial products, their financial behaviours, their financial relationships and their financial environments.”
“The cure of a part should not be attempted without the treatment of the whole” – PLATO (circa 380BC) It is generally considered that Plato was one of the three acclaimed Greek pioneers of Western philosophy. Along with his teacher Socrates and his pupil Aristotle, the three devised some of the most significant foundations for generations of philosophers and thinkers that followed them. The above quote highlighted his concern that his fellow practitioners were reducing the study and science of medicine to an intricate understanding of its parts rather than being seen as a study of a total system, a total being.
Plato could be speaking of the study and practice of advice in the 2020s. It is being ruined by treating people’s financial lives as simply the sum of its technical parts. Nothing could be further from the truth. The beliefs of Plato and acclaimed behavioural scientists such as Daniel Kahneman and Richard Thaler provide an intuitive ‘law’ for when advisers consider the price of value for a client. Suppose we believe that for every significant choice made in life, varying degrees of uncertainty are attached. In that case, it follows that there are varying degrees of value for the individual considering the choices.
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