Ego trip – how being successful could be your downfall
“It goes like this. The more successful you are at something, the more convinced you become that you’re doing it right. The more convinced you are that you’re doing it right, the less open you are to change. The less open you are to change, the more likely you are to tripping in a world that changes all the time.”
This quote is taken from a piece by Morgan Housel called Getting Rich vs. Staying Rich, and it really stuck with me.
It’s not about arrogance, it’s about success. When you go through life being above average at most things (and I’m talking academics, sports, career, etc.) it becomes increasingly difficult to tone down the internal belief that you can do it better than most. No matter what it is.
This character trait is more often than not a good one. Self-confidence is an incredible tool for success. But in some situations, can it be a hindrance?
Personal success and personal finance
When you have been continuously successful it can be difficult to trust another person for guidance on your personal finance decisions. This creates the following reactions to using a financial advisor:
- I have the skills, I can do it better at no cost
- I have been successful up until now, why would I need help going forward?
And, fair enough, perhaps you do have the ability to do the job as well as they do. But consider these 2 things:
1.How valuable is your time?
As we get older and our financial lives become more complex, the time it takes to manage our personal finances increases a fair bit. As such, doing it yourself requires sacrificing time doing other things like spending time with your family, working out, or simply getting away from it all. Of course, the decision to outsource financial help and save yourself the time is a very personal one, but something you should consider objectively – what is the marginal cost of managing your own finances versus the marginal benefit of having more free time?
2.Are you paranoid enough?
“A touch of paranoia, a suspicion that the world is changing against you”. Famed Intel CEO, Andrew Grove, says this is what helps people to STAY on top.
This point is interesting, and I think the operative word here is “touch”. Having just the slightest fear can encourage an increased level of focus and efficiency. If you sit on your laurels, it could be your money & time that you lose. You aren’t accountable to anyone but yourself. As an independent financial advisor complacency can be much more costly in a much more tangible way. If a financial advisor sits on their laurels and does not adapt, if he/she does not add value, they lose clients. And this can have some serious long-term consequences for their business.
We at Zoe believe that the wealth management industry is going through a paradigm shift in which the role of the advisor itself is changing from an asset allocator to a household CFO. Many advisors are not adapting and they will themselves face a “world that is changing against them”. Ultimately, the marginal cost of assuming that yesterday’s success means tomorrow’s gains is much higher for them than a do-it-yourselfer.
The benefits of an independent fee-only financial advisor are not in their ability to “beat the market” but rather in their ability to adapt, to always remain a student of the market and the tax code, and to make sure they’re helping their clients achieve their goals. Of course, some people have the capabilities and the time to do the same for themselves, but for the rest of us having someone to keep us sharp (and honest) is the right amount of paranoia to help us stay on top.
*All investing is subject to risk, including the possible loss of the money you invest. **The projections or other information generated by Zoe Financial, Inc. regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results.