Pick your advisors wisely - simple checks to ensure the advice you receive is sound and unbiased.

We all seek answers to questions and problems that face us so we can move forwards with our goals. Sometimes the answers come from books, podcasts, seminars and sometimes from individuals. The challenge is picking the best advice from the best advisor.

There are, and will be many advisors in your life, including parents, friends, relatives, professionals (solicitor, accountant, financial advisor/planner etc), co-workers, business people, menotrs, and the list goes on.

However, how do you pick who's advice to take and who's advice to reject?

How do you know that the advice being offered is best for you and your situation, and that it is intended to benefit you in an unbiased fashion?

Well, at face value, you cannot trust any advice your receive without performing your own due diligence. This will involve you questioning the source to determine if the advice is sound and proposed in a manner that focuses just on your interest or issue, if the advisor is talking from experience or simply offering an opinion based on limited or zero knowledge (most friends and family fall into that latter category).

So, how do you filter out the good stuff from the B.S?

There are no real hard and fast rules to work out the answer to the above question, however, I can tell you how I sort out the good, the bad and the ugly.... and that is by asking the following questions (please bear in mind that these are my questions, and are by no means the be-all-and-end-all, but are more a bare minimum that I would ask);

1. Does the advisor stand to make a monetary gain if I take their advice? If the advisor stands to make a commission/profit as a result of me taking their advice, then I automatically assume that their advice is likely to be biased and pushing me in a direction that favours their monetary gain and not necessarily what is best for me. Examples that fall into this category would be some financial planners/advisors, some realestate sales people.

2. Does the advisor have the relevant experience in the area? I only really listen to people that have been-there-and-done-it themselves. If someone cannot figure out how to make it happen for themselves, then how will they be able to advise anyone else? Basically, such "advisors" are really offering their biased opinions rather than real advice. People that fall into this category include just about everyone - friends, family, financial advisors, business owners (whose businesses are struggling to make ends meet year after year), co-workers etc.

3. Has the advisor got a long-term history in the area they are advising in? An example of this is how I have had young financial advisors offer to help me manage my investments and advise me as to where to invest. These young advisors aged in their late 20's through to early 40's have never experienced the consequences of high inflation, war, market crashes (such as the dot-com bubble around 2000), high interest rates etc. As far as I am concerned, I don't want to be a guinea-pig for them as they navigate through tough times for their first time. I would rather go with someone that has done it before and knows the history of the various situations that may present themselves in the future and the best way to either avoid navigate through these scenarios.

4. Is the person offering the advice successful themselves? In other words, if you are looking for business advice, is the advisor you are using (or looking to use) an owner of a successful and profitable business? I once had a financial advisor come to meet me to discuss potential investments. The man was late 40's and drove a old Commodore sedan. For me, that was the start of the end for him... if he could not make enough money for himself in order to drive a nicer car, how was he going to make money for me??? Now, that may sound snobbish, but he is supposed to be selling himself to me, convincing me that he was capable - but he didn't. After discussing further, and asking other questions, the odds stacked up against him and I did not consider him.

5. Does the advisor have references? Ask for them! You will feel more confident if you know that others that have used a particular advisor are happy with them. This works well for professionals such as solicitors, accountants, financial planners, brokers etc. Knowing that the advisor has happy clients that you can speak to is extremely valuable.

6. Bear in mind that you can have multiple advisors in the same area (such as law) and choose which one you use depending on the application. Ask questions to find out their strengths. For example, the solicitor I use for purchasing property is different to the solicitor I use for estate planning, which is again different to the solicitor I would use for litigation. Know your advisors and work within their strengths.

7. Is the person you seek advice from a braggard? Are they using the opportunity to tell you how good they are and what they have achieved without actually providing any advice or guidance? If so, such people are "show-ponies" that revel in the opportunity to brag about themselves. I have met people like this. Usually a lot of talk but little substance, they try to sound like they know everything on a subject but are in effect clueless. Just walk away from these people, as they will try to boost their own ego and feel better about themselves at the expense of others.

No matter who you choose as an advisor, remember, you may (hopefully) eventually outgrow them as your situation improves, as your experiences grow etc. and you will need to find better advisors.

When it comes to advice from family and friends, remember that the "advice" that may be given is not from expreience, is likely not malicious, but more an intent to protect you from failure, disappointment or pain.

It is usually their opinion based on their feelings rather than real experience or knowledge on the subject matter. When it comes to friends and family, only really listen to those that have been there and done it themselves.

Example: if your uncle has had a small business for the last 25 years, works long hours, and the business has always struggled to make ends meet, and has always had business debts, then maybe he is NOT the person you should take business advice from (just saying)!