A Noble Prize winner had some sobering comments today for hundreds of financial professionals at the IMCA 2015 New York Consultants conference in Manhattan.

You and your clients know less about investing than you think. Keep brilliant investing ideas to a minimum. Don’t overtrade. Passive management is often best. Most investment forecasts miss the mark. Hindsight will often fool both investors and advisors. That’s caused by putting the past in an optimistic light, forgetting mistakes and playing up seemingly correct calls. And luck, not enlightened management, can be often a huge factor in strong investment returns as well as Super Bowl victories.

Those were some of the comments of Daniel Kahneman, the father of behavioral economics and the winner of the 2002 Nobel Prize in economics.

“People are prone to hindsight,” he told the advisors, warning that they can fool themselves by thinking that the future is easy to forecast even when they repeatedly are wrong.

“What this hindsight is, is that an event that looked very uncertain before it happened then seemed very obvious after the fact, when we know it occurred,” according to Kahneman.

“What I’m telling you is that the world is not predictable. And what that means, from my point of view, it is that a lot of what happens is luck,” Kahneman said. “Things happen that we have no control over.” People, in hindsight when things go right, tend to overestimate their abilities and underestimate luck. “And that’s true in everything,” he said.

The hindsight danger, he added, isn’t just one bad call. It is the tendency of advisors and their clients to believe that the “future is knowable.” It is the danger that somebody “ought to know” what the future is, according to Kahneman. He added that financial professionals need to consider this potential for error because it can profoundly affect client relationships.

“The hindsight phenomena has terrible implications for decision making and they also have quite terrible implications for the relationships between clients and financial advisors,” he noted

Kahneman, a Princeton University emeritus professor of psychology, is the author of the book, “Thinking Fast and Slow.” He used a sports analogy to illustrate the dangers of advisors and sports analysts employing the hindsight syndrome. His example was the recent Super Bowl triumph of the New England Patriots over the Seattle Seahawks.

“Notice the credit the Patriots got because the Seahawks made an absolutely stupid call,” Kahneman noted. (A botched last minute play by Seattle handed the game to New England, which was on the verge of losing the game).

“If the Seahawks had won, as they should have done, they would looked very strong and the Patriots would have looked weaker. We now view the whole game in the light of what happened in the end. Yet many people who said the Patriots would win the game feel vindicated because indeed the Patriots won the game.”

Advisors think they can predict markets just as many are taking credit for picking the Patriots, Kahneman argued. After the fact, events seemed obvious, he said. “And the other thing that happens,” he said, “is that people forget what they used to think before the event.”

But in both cases, luck and unpredictable events, not advisor insight or sports analyst brilliance, often are the cause of final results.

He added that, in understanding clients, the most important insight for advisors is investors “tend to put a lot more weight on losses than gains.”

That, he said, is contrary to much standard financial analysis, which emphasizes the accumulation of wealth more than potential losses. It is important, he argued, for advisors to know exactly how much clients can sustain in losses during bear markets. They must be “inoculated” against bad times, he said.

Kahneman also counseled that clients and advisors should “think small.” They should try to stay away from big risky investment ideas. This often leads to investors buying high and selling low..

Women tend to be better investors than men, he said. They tend to stay with an investment longer. They are less prone to jump in and out of investments, selling winners and buying into losers and, at the same time, running up costs. “Having fewer ideas is better,” he said.

Has does the Nobel laureate invest his funds?

Kahneman says his advisor generally uses passively managed funds. His most important piece of advice to advisors: “Don’t churn accounts.”

Following are some of the questions Kahneman took from the audience at the IMCA Conference:

Q: How should advisors help clients?

Kahneman: Clients should think in terms of policies. Clients should not look at results on a daily or a weekly basis. The less frequently they look at their results, the less they will churn and make changes. And the less changes they make, the better off they will be. You should encourage long-term commitments. You should help them to try to avoid overconfidence.

Q: Have you changed or revised any of your earlier theories?

Kahneman: That is a trick question. I’ll look bad regardless of what I say.

Q: But have you?

Kahneman: Actually, I change my mind all the time and I forget about it immediately. (Laughter.) So when I look back, I say I always thought all of these things. When I look back, I was wise from a very early age. (More laughter, applause.)

Q: How much did you lose on the Seahawks?

Kahneman: You know the answer.

Q: How do you talk about clients about things going bad with a plan?

Kahneman: It is important to discuss with the client under what conditions the client will change his mind. So you are making an investment and things might go poorly, temporarily or permanently. How much are you willing to use before you quit? That’s an important conversation. Now the client may not always know the answer but it is very important to try to pin them down. But is your client willing to tolerate a drop in your investment? So that is a very important conversation.

Q: You spoke about women as better investors than men because they hold on to investments longer. Are there any examples on that you can cite?

Kahneman: I’m really talking here about overconfidence and the risks of overconfidence. And this is a real problem for financial advisors. And I’m sure you face it very day.

Q: How?

Kahneman: And that is your clients coming to you because they seek confidence. They want to talk to a guru who really knows what’s going to happen. I remember when I lost faith in a financial advisor many years ago. This was way back in the Nixon administration, a very long time ago. And he said something about being worried, then added that Nixon would do this or that. And then he touched wood. And then I saw him touching wood and I thought he has no idea. So overconfidence is certainly a problem. And women are certainly better at figuring out that problem. And men ought to emulate women in those respects if they are to serve their clients better.