It is impossible for each of us to be experts in everything we face in life — after all, we have a “day job” and all the complications it entails. For nearly everything else, especially investing, we need help. That’s why you need to assemble your own panel of trustworthy advisors.
A lot of people seem to get advice on the cheap. They turn to TV — where they can get their financial investment advice from the usual cast of talking heads — and even health, psychiatric, and relationship advice from various programs filling those niches. The Internet also abounds with expert advisors.
But while TV and Internet advice may be free and readily available, it might be worth no more than the price you’re paying for it — which is nothing.
In order for advice to be of any value, it should come from people who are in an educated position, and have at least some familiarity with your personal circumstances.
You can get this advice by creating your own panel of trustworthy advisors. In some cases that will cost you money, but it will generally be well worth the price.
Enlist Paid Advisors
No one likes paying for advice, but sooner or later we will reach our limit of understanding what we’re getting into. When this happens, refusing to pay for expert advice can be a completely irresponsible act.
You should have a short list of professional paid advisors. However, that should never mean you can trust an advisor’s advice simply because you are paying him or her for it. The advisors you choose should meet certain criteria:
- Be people who you are personally comfortable
- Posess proper qualifications for their area of expertise
- Be well-recommended by several people you trust
- Have a good reputation in your location
- Have a solid understanding of your personal situation, needs and preferences
You should apply this criteria to any paid advisors who you hire. Some of these types of advisors should include an:
- Accountant or CPA
- Financial planner
- Investment advisor
- Insurance broker
At different stages of your life, you’ll have a need for each of these professional advisors, though financial planners and investment advisors are often the same person.
Work With Informal Advisors
Sometimes the type of advice you need does not rise to the level of paying a professional.
In addition, it helps to have informal advisors who can help you reach logical decisions based on what paid advisors have told you. You should have a list of informal advisors that you can turn to when the need arises.
You might start with family and friends, and while that sounds logical on the surface, it’s not always the best course.
While you may trust a friend’s logic, if he or she has no real expertise in the area you are seeking advice, the opinion may be very little value. The friend or family member should at least have some familiarity with the area of your concern.
You can start your list of informal advisors with family and friends, but you should also go beyond the circle in order for your “panel” to be complete.
You may want to add business contacts, networking contacts (in specialized areas), mastermind group participants or anyone with expertise who is close enough to know your situation, but far enough away from you to be objective.
Your informal panel of advisors will probably be able to handle the great majority of situations and concerns when you need outside advice. This will enable you to restrict your use of paid advisors to only the most complex situations.
DIY and Learn What You Can
Whether you are using paid or informal advisors, you should always have at least some understanding of the situation. This will help you to know where to turn for advice, to know if the advice you are being given is truly right, and even to help you ask the right questions.
This doesn’t mean you need to be an expert in the area you’re seeking advice, but it does mean you may need to do some research before even seeking outside opinions.
Very often, the answer to whatever dilemma you face will come out in your research (this is where Google comes in handy). At that point, you can use outside advisors to simply validate your understanding.
It’s smart to invest time on a regular basis doing some research and familiarizing yourself with any areas of business or investment that are common in your life.
For example, if you regularly seek investment advice, you should become as educated as you can in regards to investments. This will put you in a position to judge the validity of the advice you’re given by others.
We need to have a panel of trustworthy advisors to rely on, but at the same time we should never put ourselves completely at the mercy of their advice.
After all, advice may help, but in any action you take success or failure will rest completely on your own shoulders — not your advisors.
What sources of advice do you regularly seek when it comes to business and investing?