Thursday, January 26, 2012

Unintended Humor

Part of my job is to stay informed on the topic of financial planning, so I read several trade magazines every month, including, Investment Advisor, Financial Planning, Journal of Financial Planning to name a few.  Last week I was reading Financial Advisor magazine and I saw this quote in the Editor's Note:
"If there is any takeaway from the last four years, it has been that the collective intellectual firepower of the so-called experts could practically fit on a thimble." 
How great I thought, they finally get it. Good financial planning has nothing to do with looking for an "expert" who can predict what will happen in the future. Not only doesn't it help, it most likely causes bad decisions.
Then I made it to page 59 and saw this:
"Financial Advisor and Private Wealth magazines announce their inaugural all-star research team"
I couldn't help laughing out loud.  First, the editor of the magazine admits that "the experts" collectively added no edge to our ability to manage our way through the financial crisis, and then his magazine continues the same old practice of guessing which "experts" will be best able to help us manage our way through the future. Good luck with that.

 I was asked to provide some further explanation of my comments.  Is it inconsistent for me to criticize "experts" when in fact I am an expert in financial planning.  For clarity, there are many people with an expertise in economics and finance who have a deep understanding of how these complex systems work. A lot of expertise goes into good financial planning, including an understanding of how broader economic issues affect personal finances.  The best use of this expertise is to help our clients make reasonable and thoughtful financial decisions.  What I am critical of is the media's reference to experts as people who can predict what will happen next.