Judging expertise--the right way!

I was simply dumbfounded.

I was having breakfast with a good friend, recently, when she explained the good qualities of her financial advisor. Specifically, she referred to her advisor's a) ever-present volunteer activities in the community and b) diligent hobby fly-fishing on every possible occasion.

First, let me highlight that my friend is no dummy. She's one of those people that is fiercely dedicated to her job, an expert in all the important areas of her work, and possesses a mind-numbing amount of information about her interests. This is one smart cookie.

Second, I have nothing against volunteer activities or fly-fishing, or long walks on the beach for that matter.

Third, I'm not an unbiased observer. I am, after all, an investment advisor myself.

With all that, why on earth would you judge your financial advisor based on their presence in the community or their various hobbies!

When I look for a doctor, I don't care if she sings in a barbershop quartet, or if she likes to play bridge. All I care is if she is an expert in her medical specialty. I want to know she reads the latest journals and works diligently to improve her results over time.

When a fireman comes to pull my unconscious body from my burning house, I don't care if he enjoys flower-arranging or Internet chat rooms, I just care if he can carry me down a flight of stairs and then put out the fire with minimum property damage. I want to know that he can squat 300 pounds and studies fire damage to figure out how best to put them out in the future.

And, when I look for an expert in investments, I don't give a hoot if they volunteer and fly-fish, all I care is that they are expert at what they do.

Personally, I want that doctor, fireman and financial advisor to be a neurotic, obsessive/compulsive individual so dedicated to their field that they seldom have time for much else.

So why was my friend so excited that her financial advisor was always volunteering and trying to fly-fish? I don't get it.

Doesn't she realized that when her advisor is doing something other than being an expert in their field, she's the one losing. Doesn't she realize that every hour volunteering or fly-fishing is another hour when the advisor's competition is finding ways to get better returns, better plan for her future, or broaden their knowledge?

There's a right and a wrong way to judge expertise. You don't judge it based on ancillary interests or good intentions in the community. You judge it based on best practices, proper education, diligent improvement, and long run results.

And one more thing while I'm on my rant: when your advisor regularly calls you to suggest you make changes to your portfolio, and he's compensated based on commissions, he's not calling to help, he's generating sales so he has more time to fly-fish while your portfolio is floundering.

Nothing in this blog should be considered investment, financial, tax, or legal advice. The opinions, estimates and projections contained herein are subject to change without notice. Information throughout this blog has been obtained from sources believed to be accurate and reliable, but such accuracy cannot be guaranteed.