Advisors Cautioned Against Their Own Biases
An open mind, avoiding emotional biases and embracing imperfection are essential for a better understanding of financial markets, Cullen Roche writes on his blog Pragmatic Capitalism.
The 2008 financial crisis spurred many people in the financial industry to take a fresh look at finance and economics, writes Roche, founder of financial services firm Orcam Financial Group. Nonetheless, financial advisors may want to do some introspection on what they’ve actually learned. For Cullen, the financial crisis taught him that he knew less than he had thought. He also had to admit that his previous views had been wrong.
The keys to being objective, Cullen writes, are to be “voraciously open-minded” to various views, to think independently and to constantly assess whether you could be wrong — rather than merely looking for ways to confirm that you’re right. In addition, it’s essential to guard against emotional and political biases, he writes. These biases can cloud critical thinking, according to Cullen.
Finally, financial advisors may have to learn to just let it go sometimes. Learning is certainly be beneficial, Cullen writes. But spending too much time watching financial TV, for example, can actually hamper the ability to learn. It’s far better to strive to be competent than to be perfect, according to Cullen.