Beware The Know-It-All

We all know some of them. There are two kinds:

  1. The ones who do know it all, at least within their specialty, and
  2. Others who refuse to be wrong.

Most of the people who are in group one have learned how little they know while those in group two are at the peak, according to themselves.

There is a descriptor for what’s happening in the second group. It’s called the Dunning- Kruger Effect.

Dunning-Kruger in Psychology.

a cognitive bias whereby people with limited knowledge or competence in a given intellectual or social domain greatly overestimate their own knowledge or competence in that domain relative to objective criteria or to the performance of their peers or of people in general.” – Wikipedia

The learning curve looks like this:

High confidence, low skill is hardly a place you should want to be. Much like young teenagers. Most grow out of that space.  Some people stay there and some develop complicated theories to justify their confidence. Most of those are in universities teaching subjects where cause and effect are not tightly connected. You don’t see it so often in the engineering department where the subject is more objective.

Humility is the defence.

In personal financial affairs

Where would you place yourself on the curve in respect to:

  1. Investment skill, knowledge, and experience.
  2. Control of spending with budgets, and savings goals.
  3. Holding a clear long term plan for direction
  4. Developing earning power

Some are well up the slope of enlightenment. Others are overconfident. I suppose confident that it will work out.

While you climb the slope of enlightenment, there is a need to acquire skill. What skills should you acquire from others until you develop your own? Other people’s experience is far less costly than making your own mistakes. When you have a question or concern, ask someone. Especially ask, what am i missing?

Most of the deep skills are not ones that affect you every month. Knowing a lot of tax or other law is usually more trouble than it is worth. In those areas, you should have a clear idea of direction and fundamentals, but keeping up to technical details is not crucial. There are people who do it all the time. Ask them.

Spend your time developing skills you need for your career instead of half learning things that are seldom used.

There’s another economic idea. “Comparative advantage” Use your resources where it pays most. Architects should not do their own legal work, and lawyers should not design their own buildings.

The takeaway

Use your resources to your best advantage

It’s easier if you are objective about what you know and could still learn

Do-it-yourself is not always a good choice.

Climb the slope of enlightenment on specific subjects. Include social skills.

Help me please. If you have found this useful, please subscribe and forward it to others.

I build strategy and fact-based estate and income plans. The plans identify alternate ways and alternate timing to achieve both spending and estate distribution goals. In the past I have been a planner with a large insurance, employee benefits, and investment agency, a partner in a large international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business. I have appeared on more than 100 television shows on financial planning, have presented to organizations as varied as the Canadian Bar Association, The Ontario Institute of Chartered Accountants, The Ontario Ministry of Agriculture and Food, Banks – from CIBC to the Business Development Bank.

Be in touch at 705-927-4770 or by email to

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