We are living in the Information Era. The government relinquished control of the internet in 1984 and the speed at which we could access information exploded. Each day, information becomes more easily transferable and knowledge more readily gained. Yet things are more complicated than ever.
You’d think that the more information available, the more we’d learn; and the more we’d learn, the clearer and simpler things would become. I find it ironic that the opposite is true.
As we gather information, we acquire knowledge.
Knowledge is a grasp of the facts, the sum of what we know. Knowledge is awareness. But knowledge is not wisdom. Wisdom is knowing what to do with that knowledge. Too many people fail to realize that wisdom and knowledge are not synonyms.
George Orwell observed that every generation imagines itself to be more intelligent than the one that went before it, and wiser than the one that comes after it. Today’s investors are guilty as charged. Their easy access to information has (mis)led them to believe that they are the best and the brightest. But they remind us every day that that is not the case. Their mistakes are age-old.
Since the very first investor roamed the earth, people have been chasing performance. Their time horizons are too short and they don’t have a plan. They get out at the wrong time and cannot bring themselves to get back in. They fail to diversify and they overreact to sensationalism in the media. They want results right now and they exceed their own risk tolerances. Tomorrow’s generation will make the same mistakes. And that is exactly why your role as an advisor is so vital.
It is incumbent upon you to do more than just provide the necessary information. You’ve got to provide the necessary wisdom—wisdom that you accumulate as you mature.
Imagine one new advisor gathering information on his or her own, struggling to find a way to open accounts, succeeding by trial and error, constantly running into brick walls that, in hindsight, were all too obvious.
Imagine another young advisor learning at the knee of a seasoned, successful advisor, a mentor. Imagine how much pain the mentor would help the new advisor circumvent, how many costly failures would be avoided.
Just as there is no earthly reason for a new advisor not to have a mentor, there is no earthly reason for an investor not to engage the services of a financial advisor.