Beware of Narcissists When Choosing a Financial Advisor

The Importance of Reflective and Rational Thinking in Consultancy

When it comes to seeking advice, finding consultants who are truly reliable and capable of reflective and rational thinking can be quite a challenge.
Most of us are not naturally inclined to question ourselves, as cognitive psychology shows that we tend to confirm our initial ideas rather than testing them thoroughly.

For instance, if presented with a sequence of numbers like 2, 4, 6 and asked to guess the rule behind it, one might think of “even numbers increasing by two”.
By sticking to similar ideas without exploring broader possibilities, one may never uncover a wider rule, such as “increasing numbers”.

Instead of challenging our ideas, we often seek confirmation, leading to erroneous conclusions.
In medical studies, for example, instead of considering all possibilities (both successful and unsuccessful cases among treated and non-treated individuals), we tend to focus only on successful outcomes post-treatment.

The Pitfalls of Blindly Believing in One’s Ideas

A good consultant should avoid the trap of blindly believing in their own ideas.
An interesting experiment conducted with managers from the credit industry in previous years serves as a case in point.
They were asked to choose a number between 0 and 100, trying to approach 80% of the average of all numbers chosen.

Initially, many would think of 50, then calculate 80% of 50 and respond with 40.
However, some would reflect deeper and consider: “If everyone says 40, I should say 32,” which is 80% of 40.
This reasoning can continue till zero.

However, wiser and less egocentric consultants do not assume that everyone will reach the optimal conclusion of 0.
They understand that some might stop at higher numbers like 40 or 32.
Therefore, they provide an intermediate answer, often between 10 and 20, based on an average of “others’ egocentrisms”.

The Traits of Exceptional Consultants

The best consultants do not solely rely on their own ideas but seek to understand others as well.
By putting themselves in the shoes of others and contemplating their thought processes, they can offer more realistic solutions.

An exceptional consultant builds a network of shared and reciprocal knowledge.
While common knowledge is crucial in any organization, mutual knowledge – reflecting an understanding of others – is what fosters healthy relationships.

A strong consultant-client relationship is built on this mutual understanding.
The top consultants begin by assessing the expectations of others, then tailor their response strategies based on these evaluations.

Furthermore, a top consultant is not just an expert in numbers but also understands and empathizes with the emotions of their clients and colleagues.
They should be able to see things from their perspective, including their judgment errors.

In essence, a consultant should possess technical knowledge as well as the ability to empathize with those they work with.
This skill of “shared understanding” is essential in consultancy but is a rare quality that only a few truly excel at.

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