Advice and Decision Making
Here are some concepts to consider and ways to make sure you are getting sound advice and how to approach making decisions:
The resources should be unbiased, independent and/or aligned with you and your best interests.
- Ask how someone gets compensated based on the advice they are giving or what is in it for them and often their answer will speak volumes.
- If someone is making money from one side of a decision or advice versus another, they may be biased, and while their advice may be sound it may not be aligned with you or independent.
Someone who is aligned with you succeeds when you succeed and their only motivation for helping you and giving you advice is that they have as much to win or lose as you do from his or her advice
- If good advice is given, the relationship will grow strong and be built on trust. If bad advice is given, the relationship will grow weak and the failure will reveal that you need to seek better advice and find a new advisor.
- Advice that compensates the advisor regardless of whether it is good or bad, through transaction fees and commissions, means that your advisor will make money no matter if you succeed or fail, and the advice is not based on you, the client, but rather revolves around the compensation received.
Money and finance are business topics and emotion should be avoided to keep a clear focus and perspective on the matter at hand
Remove emotion from the equation. Instead, look at the facts so you can see the root of the situation.
- Advice should help you boil things down to their simplest form, and considering the cause and effect or the best- and worst-case scenario as they pertain to a decision is a good way to eliminate emotion.
- Decisions should only be based on the relevant facts and not on assumed variables or wild predictions.
- If you are calm and collected while discussing or deciding something, it can be a great indicator of your emotional involvement in the process and sound decision-making.