Information Equals Power and Sophistication
Is financial education important? How do you know your financial advisor is good?
We all know people who are book smart and common-sense stupid.
People that have all kinds of knowledge in general who you feel like they could tell you the dictionary word by word, but yet when it comes to the normal common-sense things, they can’t apply it.
So having all of the knowledge and information in the world doesn’t do us any good unless we know how to apply it and how to make it make sense for us in our situations.
Truthfully, I’d rather have somebody who is street-smart with me rather than someone who is just book-smart.
The thing about being book-smart is that they can’t apply it. The same is true for every other area of our
life, including our financial life.
This week we’re wrapping up the Common Portfolio Wisdom series and I think this piece could actually be used to apply to a lot of different things, which is “Information Equals Knowledge and Sophistication.”
Is that true or is it not?
Well, I think there are pros and cons. We know information is important, especially accurate information.
But information is now more accessible than ever on any topic, just ask google!
Financial, health, anything we can go to the Internet and find all kinds of info. We live in a world with information overload.
There’s too much information and what really has to happen for that information to equal anything important is the accurate interpretation of what we’re reading. It’s how to apply that information.
That’s what equals the power. That’s what gets you to where you want to go. That’s the goal.
Not just information to have information, but how to act on it and how to interpret it the right way.
DIY Financial Planning
So I want to flip on two different sides of this, let’s start with you, the individual investor.
Sometimes people think if I don’t have all the information, I can just get all the information. I’m just going to do all the research and do it myself.
Sometimes that works.
I like to do some house projects too and I know my Aunt does too and she’ll say, “Hey, you can just Google or YouTube a video on that,” and you can YouTube videos and all kinds of things!
I might be able to find a video to teach me how to do a house project, but there is nothing that’s going to teach you exactly how to put together your financial plan or your investment portfolio, or your retirement income plan because there are too many outside factors that could affect your desired outcome.
There’s not just one size fits all. Each step looks a little different for each person.
You can get an overall idea, but you will never just get all the information from watching videos.
So you have to have somebody help interpret that information and how it makes sense to you in order to put that plan together.
There is a myth; people seem to think they’re supposed to be as good at financial planning as they are in every other area in their life.
The fact is, we all will hire out for projects, whether it’s for our house project, plumbing, or electrical – that’s something I will never attempt!
We all hire people for different things because we don’t specialize in it.
I don’t think any of us takes all our healthcare into our own hands. We don’t perform surgeries on ourselves, we go to the specialists!
So, you’re never going to understand or know all about the financial planning or retirement planning space because that’s probably not your area of expertise.
To figure out which of these financial or investment strategies makes the most sense for you, you need someone to interpret the information in the right way.
With all of the information available in this world, we live in it’s easy to get stuck because there’s too much. You can research everything and find thousands of articles and posts on both sides of any issue. This can leave you confused and not really knowing what you’re looking for.
So it’s not just information, it’s the accurate determination and you can’t always handle all of that by yourself when it comes to the financial world.
How Do You Know That You Have The Right Advisor?
Sometimes we need help, which brings me to the second part.
In working with an advisor, or any professional meaning financial, legal, health, any of those, how do you know that the person is right for you?
We all have access to all these great continuing education courses.
The information is abundant for everyone, but sometimes I find that advisors or other professionals will talk in these technical terms or in our financial industry jargon and they sound sophisticated but does that really mean that they’re actually processing it the right way and are someone that you want to trust to work with?
It’s not about sounding smart or being book smart, it’s the opposite. Can they take that complex idea or can they take the thing that you might find confusing and make it simple enough for you to understand?
Do they have street smarts? Do they work with people just like you?
If you’re working with somebody, you don’t want someone who just sounds smart, you want somebody who can take all of the information that’s out there and interpret it in a way that makes sense for you to understand so that together you can figure out how to interpret all the information out there and put it together to meet your goals in your plans.
So information knowledge in itself doesn’t do anything. It’s the interpretation of that information that makes sense; that’s for you and for the people you’re working with.
We have a couple of great resources to help you with this! (click to download)
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