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Financial Freedom Is Merely Organized Common Sense
Using Expertise
I heard an interesting description last week. Subject-Matter Expert. The point was that while it is possible to be an expert within a subject, that expertise says nothing about expertise in other subjects.
We are all dumb when talking about things with which we are not familiar.
For example, a doctor will be unwise to comment on the amount or type of life insurance applied for by a person he is examining. Similarly, accountants are unwise to draft agreements and lawyers are probably well advised to refrain from making a diagnosis of their client’s capacity to make a will.
A worthy method is to offer experientially drawn knowledge. Essentially, to notice and comment upon the possibility that there may be more to the subject and a subject-matter expert should be consulted. That would just be the neighborly thing to do.
An unworthy approach is to give advice outside your field of expertise with the idea that it is good and complete advice. If the client follows it and it turns out to be defective, then you will be liable and you will have an additional problem to deal with.
Your professional liability insurance almost certainly does not cover you. That could be a problem. There is a case where a doctor who recommended that a patient drop his application for coverage became the de facto insurer when the client subsequently became uninsurable. He did not get to collect the premiums either. Bad outcome.
Within your field of expertise, incomplete information is just as dangerous as incomplete knowledge. Conclusion jumping is not yet an Olympic sport and there is small reward when right, and large costs when wrong. Meningitis looks a lot like the flu. Outcomes are different if a doctor assumes flu and it is not.
The conventional wisdom is that it takes 10,000 hours of focused effort to become expert. In the interim it pays to have a mentor. Use the facilities available.
For financial advisers, there is a tendency to follow formulas for insurance coverage, portfolio design and savings levels. Most people fit a common model and advisers, usually less experienced ones, sometimes believe that all people do. It is not so. Every single case you do has some nuanced difference from every other. There is no product that is good for everyone. There is no generic plan that always works.
If you get in the habit of exploring deeper than other advisers, you will build client loyalty. Keep in touch regularly. Gather more current and more complete information. The gathering of information is a useful annual review step. Often, new opportunities arise from simple changes. A new partner in a business, an inheritance, a business expansion, a bonus or raise all have effects that matter.
If you don’t perform regular and frequent reviews, you will find out too late sometimes. Maybe the client’s bank will know before you do. Does that ever work out?
To be successful, professionals must hold expertise and the information that allows it to be applied. Preparation includes finding all the information and all the expertise you need. Renowned New York lawyer, Louis Nizer, sums it up. “Preparation makes a fool competent, and an average man brilliant.”
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Don Shaughnessy is a retired partner in an international public accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario. Contact: don@moneyfyi.com
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