A BRIEF SUMMARY:
• Bad advice is common. Many sources lack expertise or have hidden incentives, from a well-meaning family to commission-driven professionals.
• More opinions do not mean better insight. Asking too many people leads to conflicting advice, overwhelming rather than informing you
• Firsthand experiences, incentives, and short-term thinking influence what people tell you, often without them realising it.
• Read from top investors, analyse incentives, and use AI tools like ChatGPT for objective counterpoints.
Bad advice is more common than good
Most financial advice comes from people who lack expertise or have hidden incentives
Well-meaning friends and family often give advice based on their own experience, which may not apply to you. Your cousin who made a killing speculating on cryptocurrency might assume investing is easy. Your uncle who lost money during a downturn might tell you to avoid stocks altogether.
Many professionals are salespeople disguised as experts, motivated by commissions than your best interests. Social media can be even worse. Self-proclaimed gurus cherry-pick their wins and promote strategies that worked one time. Even mainstream financial news is not immune to sensationalism: headlines are designed to stir emotions rather than provide you with useful guidance.
If you want bad advice, ask everyone
If you ask enough peopIe for advise, you will eventually get an answer that sounds convincing – even if it is completely wrong. Everyone has an opinion, not everyone has insight. The more people you ask, the more conflicting advice you will hear. This can lead you to become overwhelmed rather than informed.
This can be dangerous with money matters because different people have varying risk tolerances, time horizons, and personal circumstances. When people do not know the answer, they rarely admit it. Advice is not a democracy and the loudest voices are not always the wisest ones. Instead of asking everyone and hoping for clarity, narrow your funnel and trust yourself.
People have biases
Every piece of advice you receive is shaped by the person giving it. Their experiences, fears, and personal incentives all influence their perspective. Being able to recognise this can go a long way. Many professional financial advisors are paid on commissions and have an incentive to make you purchase products with high fees. Fund managers are incentivized to prioritise short-term performance to keep their jobs.
Ask those with skin in the game
The best sources are those that have experience in what you are focusing on. These people will not tell you what to buy. They will share what they went through in different conditions and how they navigated uncertainty. This can serve you much better in the long run.
One great way to find high quality advice is to go straight to the best. Information is abundant and the insights of the best investors are available for free. If you need stock picks, you can even find out what they own easily.
AI is a newer tool that can also be helpful. ChatGPT can offer you an objective summary and counterpoints to what you are considering. AI has no incentive to push any agenda and instead can help you think through the logic of a decision.
The best advice does not tell you what to do, it teaches you how to think. Finding reliable sources can take more effort, but listening to the wrong people can cost you far more.