Why Financial Experts may not be so Smart
Have you ever watched a financial expert on TV? They seem to be speaking a foreign language. It looks like they know what they’re talking about, but I’ve noticed some interesting things. Here are some reasons why they might not be as expert as they appear.
To me, all that financial mumbo-jumbo doesn’t really mean anything. And I think it doesn’t mean anything to anyone. It’s true that the individual terms have a technical meaning, but when they put them all together there is no useful information. Perhaps the point of all this financial doubletalk is to make people who don’t know what the terms mean feel like they are not smart enough. I think everyone is smart enough to succeed financially.
Another thing they often say is, “If this happens, then that will happen.” It’s like the weatherman saying, if it’s sunny it will be hot tomorrow. Well, everybody already knows that! The question is, will it be sunny or not? Then, the financial expert usually says, “On the other hand, if that doesn’t happen, this will happen.” I think that what we really need is a good one-handed expert.
Another challenge with financial experts is they have all learned the same things from college. These colleges and MBA programs are filled with information about theory. But this theory has very little application in the real world. Is it possible that financial education and traditional college degrees do not really provide useful information?
Financial expertise should be defined by financial results.
Many experts survive by speaking financial doubletalk and having a degree from a famous university. But I wonder if those accomplishments have anything to do with success. I think, an expert should be determined by how much money they make, and how much money they make for their clients.
Most experts say “invest for the long term.” This means that people who have lost large portions of their portfolio in the market downturn should wait until the market goes back up. This may work for the financial expert who gets paid every time someone buys a mutual fund, but it does not work for most people. The people who were completely unprepared for the financial downturn do not have the financial or emotional resources to wait.
This is the seventh post in a series entitled Secrets the Financial Industry doesn’t Want you to Know.
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Related posts:
- Financial Experts and Doubletalk
- Mutual Funds and the Concept of Value Creation: Part 2
- Why you can not Outsource Financial Success
- Is Buy and Hold Terrible Financial Advice?
- 10 Secrets the Financial Industry Doesn’t Want You to Know
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is one of my favorite financial books of all time. It's an allegory about a guy who has a terrible job, and how he overcomes challenges to achieve his dreams.
