How can selecting an advisor for their values, over intelligence, lead to better investment outcomes?

Published October 27th 2023

Investing is a relatively simple game; it is a lot like driving from Melbourne to Sydney. You have a map, the road is relatively straight, however you are constantly tweaking the steering wheel to stay in your lane and arrive safely at your destination.

I use this analogy when demystifying the financial planning process to friends. Unfortunately, the industry uses a lot of jargon, and we over-complicate things. Sometimes I think we do it to make ourselves sound more intelligent or to prove up our predictions - which is a fool’s errand.

In order to act for today, while preparing for tomorrow (the financial planning process in a nutshell) I recommend people embrace these 5 principles:

No 1. Invest in values over intelligence.

• I use the term ‘invest’ because that is what you are doing. You are investing in your advisor, providing them with the resources (revenue) to improve their education and gain further experience. This investment improves your outcomes.
• Who you select is a choice, so choose wisely.
• Investing in values over intelligence is critical for your long-term success. Values are what drives behaviour, enabling you to be on the ‘same page’. This forms the bedrock of trust. Trust enables a safe space for difficult conversations, that while often unpleasant, are in your best interests.
• Intelligence is a ‘nice to have’, however easily acquired. Outsourcing weakness is usually performed by successful people who have humility and values others expertise.

No 2. Lifetime learners make the best investors.

• This is rather self-explanatory but involves some nuance.
• As a financial professional, I am required by law to study each year in order to provide advice. This is not learning, it is complying.
• Learning is coupled with values and passion. Learning is a constant. It is embedded in every conversation, every thought process, and every piece of advice. Learning is not limited to a certain number of hours required to retain your job. It is a continual search for better; for oneself and the people we serve.
• Learning is not limited to the financial planning profession, or the role we play within your wealth journey. Searching for someone who loves to explore and learn across all aspects of life is who you should strive to invest in. They will be able to dot the i’s and cross the t’s, while simultaneously navigating the vast ocean – these skills are critical for your future success.

No 3. Abdication of responsibility will lead to desired outcomes.

• It is your money and your future. If you abdicate responsibility to your advisor, you will get good advice. However, this may not be what you need nor want.
• Strive to learn as much as you can with each interaction. Ask the questions – yes, even the dumb ones – for in time, you will have the knowledge to drive your outcomes. Remember you are investing in your advisor, who will then invest in you – it is a two-way street.

No 4. Know what is enough.

• Knowing what you need to facilitate moments of happiness and joy, while living in financial peace, is what this process is all about.
• We know that happiness and joy are moments in time. However, being at peace with what you have, compared to what you want, is a skill in itself.
• Financial peace is being able to facilitate special moments within the confines of your financial situation. Building a clear picture of this is one of the fundamental reasons you seek advice – do I have enough to live the way I want to?
• Don’t get me wrong, you can strive to have much more than what you consider is enough, be ambitious and drive for great. However, once you pass your level of ‘enough’ the rest is just numbers and a ‘nice to have’, don’t let ‘more’ control you. Sitting at the front of the plane, driving a fancier car, or wearing a more expensive watch, will not add any further utility to life’s important moments.

No 5. Make it a lived experience.

• Ultimately seeking advice, is to seek a relationship. These are a work in progress with constant give and take.
• The push & pull and hits & misses are all a part of the process. Live every one of them with a learning mindset. Stick to the plan you have created, dusting yourself off and riding the bumps as you go.
• Plans inevitably change. Embrace this change as a non-negotiable; a side effect of the planning process. Investment markets have a history of making a mockery of life’s best laid plans. Treat them as a detour, not a dead-end road.

To improve your outcomes, hiding from the potential hazards is not the answer. You will encounter road works and potholes, while also having 110km zones that allow you to catch up. By embracing the 5 principles outlined above, you will be investing in your own personal Formula One pit crew or trusted co-pilot who has driven this route many times before. With a strong two-way relationship, built on trust, empathy and responsibility, you can ensure you arrive safely, with plenty of fuel left in the tank.