An excellent and valuable article by Andy Rachleff - President & CEO at Wealthfront Inc.
Over the past few weeks, I have noticed a significant difference in the way older and younger people see the importance of experts. It’s a classic generation gap.
People in their 40s or older often seek the help of experts when they face a difficult decision. In most cases, they source the experts from friends’ recommendations. In contrast, my friends and students in their 20s and 30s seem not to value expertise much at all. When they face big decisions, they poll their friends.
I don’t believe this is due to the convenience of reaching out to friends on Facebook, Twitter and Tumblr. More likely, it has to do with trust, and the fact fewer young people have peers who are truly world-class experts.
Nevertheless, relying heavily on your friends for big choices in your life is not the right answer.
Consistent advice from friends is not the same as expert advice
Take one of my former students. Two weeks ago, I heard from him that he had recently been fired from a job he clearly didn’t enjoy. He realized after only a couple of months on the job that it was not a good fit, but stayed because his friends almost unanimously recommended that he not leave before one year because it would look bad on his resume.
As I explained in How Long Should You Stay At Your Job?, it doesn’t make sense to stay at a job to make your resume look better if you are unhappy. Unhappiness on the job usually leads to a marked reduction in motivation, which leads to poor performance. This is in fact what happened, and ultimately resulted in his firing.
“Why didn’t you reach out to me when you realized you joined the wrong company?” I asked. He replied that he was too embarrassed to call, and because he received such consistent answers from his friends. I’m sorry he felt he couldn’t come to me, because I wanted to help. His friends didn’t have a broad enough perspective or enough experience to know the right answer.
Don’t confuse emotional support with expert advice
Over and over again, I see examples of people taking sub-optimal advice from their friends when making critical life decisions. I see young people turn down offers after their friends advise them to hold out for the right title. They take this advice, despite the fact that their friends have had little success themselves, and don’t know that title pales in comparison to quality of company when choosing which company you should work for if you want to build a successful career.
Yesterday, I met a prospective client who built his personal financial plan based on friends’ recommendations. None of his friends had a background in the investment business, but he trusted them nonetheless, because their plans appeared to be well thought out. He wanted to seek the advice of an expert, but he didn’t know how to identify one. Therefore he went with his friends’ advice; now he has a sub-optimal plan.
Emotional support makes it easier for you to carry out a course of action that you’ve decided is right. But don’t mistake it for advice. Advice helps you make a difficult decision. Both are important, but they are different.
It is highly unlikely friends can provide expert advice, but they can be very useful to help you find experts. I often tap them for names, especially if I know my friends have faced a problem similar to the one I am concerned with.
Experts are accomplished
I adore my friends, but I don’t rely on their judgment to figure out who is an expert in her field. Over my 25 year Venture Capital career I learned over and over again that resume, especially accomplishment, is the best way to evaluate expertise. Of course you need to do your due diligence to make sure the accomplishment quoted in a resume is real.
As I pointed out in You learn more from success than failure, only through success can you hone your game. Just because someone is successful, don’t assume they won’t engage with you. But don't try to cold call them. Always get an introduction.
When searching for advice, I look for someone who has broad and successful experience in my particular problem area. Why should I trust someone’s opinion if they don’t have that experience? I would never go to a surgeon who hadn’t faced every possible problem with my particular injury.
Online celebrities are not necessarily experts
Some people I know confuse celebrity with accomplishment. In the age of social media, people can project a broad profile online with little real world success to justify their platform. Many of my students mistakenly rely on entrepreneurship blogs that have been recommended by their friends because they are popular or well written. Just because someone has a popular blog or has published a book doesn’t mean that person is an expert. As I have said before, only through success do you learn the lessons that really make a difference.
When we set out to build our investment team at Wealthfront, we looked for experts who were well respected and highly successful. We were fortunate to recruit Burt Malkiel as our Chief Investment Officer and Charley Ellis to our investment advisory board. Burt is a renowned Princeton economics professor, author of A Random Walk Down Wall Street, the book that launched the index fund revolution, and a former Vanguard board member for 28 years. Charley founded Greenwich Associates, the most respected strategy consulting firm to the financial service industry, and also sat on the Vanguard board. He has taught at the Yale School of Management and Harvard Business School. The kind of knowledge Burt and Charley have cannot be attained in any way other than through success.
Seek advice from the best to make the best decisions
I know this attitude makes me seem old school. When it comes to my choice of advisors, I am. It’s much more convenient to reach out to friends through social media tools, and solicit their thoughts about just about anything than it is to listen to experts. But just because polling your friends is convenient doesn’t mean it’s the right choice.
When you need an advisor, seek experts whose accomplishments give them the perspective to advise.