There's No Shame in Being Skeptical

There's No Shame in Being Skeptical

No one likes to think of themselves as paranoid, but we're often more comfortable with being called "skeptical."  In finance, though, skepticism is basically just a healthy dose of paranoia.  This is nothing to be ashamed of; in fact, it is your common sense kicking into play.  In the world of finance and investing, there are plenty of people who are out to get you, so paranoia isn't entirely out of place.

Skepticism Can Be Common Sense

When it comes to investing, you need to keep your common sense close by.  Being skeptical of “the next big deal” is always healthy.  Like the saying goes, “If it’s too good to be true, it probably is.”  The same is true regarding tips from your broker and adviser as well.  Always look that gift horse in the mouth.

My brain operates around horses.  Let me give you a quick metaphor that’s coming to mind:  You’ve learned to trust your horse, and as a reward, sometimes you let him pick the heading of the outing.  Generally, it turns out to be a good experience for both of you.  Then comes the day they see a nice lush field of alfalfa and you’ve let them have the lead one too many times.

Some financial advisers are the same way.  They may know that running under the tree is no good for you, but they see the green pasture on the other side for them, and off they go.  Except when it comes to these individuals, we’re talking about fresh, new products rather than flora and fauna.

You might be saying to yourself, “Not my horse adviser.  He would never lead me in a bad direction.” But you have to remember one thing...

It’s Your Money; You’re the Boss.

The truth of the matter is that financial planners get paid in basically five ways:  salary, fee only, asset-based, fee-based, and commission only. It's a good idea to have an idea of how your advisers are paid. You have to make sure that their interests are aligned with yours.

Also, women especially feel guilty if we doubt those who are supposed to be taking care of us.  Don’t feel bad for second-guessing your financial adviser.  At the end of the day, it is your money.  They may be managing how it works for you, but remember that they work for you, too. 

Financial advisers and stock brokers provide a service to make money, so they’re going to be trying to make it.  Never let yourself lose sight of that reality. Regardless of how they're paid, it's good to have a level of healthy of paranoia when someone else is managing how you handle your money.  Some of those products are genuinely helpful to your financial growth, but if they seem too good to be true, they very well may be.

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Anonymous's picture

Anonymous wrote:

Fri, 03/25/2011 - 11:06 Comment #: 1

I feel like I was born skeptical! Obviously I wasn't but have had enough experiences that I seem to approach almost everything now with skepticism. Manys the time I wish I could accept things at face value but I just can't. Thanks for shining a light on skepticism and helping me feel less ashamed:) I was thinking about joining a 12 step program!

Jessica Schmeidler's picture

Jessica Schmeidler wrote:

Fri, 03/25/2011 - 15:17 Comment #: 2

A 12 step program? LOL. You crack me up, Jane. I've never been one to accept things at face value either. I'm sure there are extreme cases of this, but for the most part, I think being skepitical is more often a help than a hinder. :)

Balance Junkie's picture

Balance Junkie wrote:

Sat, 03/26/2011 - 13:03 Comment #: 3

Great advice Jessica. It would be nice if every "horse" took us in a fabulous direction, but that's not realistic. A healthy dose of skepticism can keep you from getting clotheslined by a tree branch. There are lots of polite ways to say NO.

Jessica Schmeidler's picture

Jessica Schmeidler wrote:

Sat, 03/26/2011 - 13:50 Comment #: 4

Absolutely! I have friends who say, "But, I don't want to seem rude." My answer always starts with, "So don't be." Like you said, there are many ways of declining an offer without being offensive. :)

MoneyCone's picture

MoneyCone wrote:

Sun, 03/27/2011 - 00:18 Comment #: 5

In my opinion, you should second guess your financial advisor! No one knows how the market will turn, always question how your advisor came to recommend a particular strategy or fund.

Jessica Schmeidler's picture

Jessica Schmeidler wrote:

Sun, 03/27/2011 - 04:25 Comment #: 6

Great advice, MoneyCone. :)

Shaun's picture

Shaun wrote:

Sun, 03/27/2011 - 10:39 Comment #: 7

Good advice Jessica,

I think you are doing yourself a disservice if you don't question the advice you are given and do some homework of your own. While a financial planner may have your best interests at heart, they are still out to make a dollar and you are generally not their only customer. It is definitely worth knowing how to ask the right questions so they know you are watching.

Skeptical? maybe, smart? absolutely!

Jessica Schmeidler's picture

Jessica Schmeidler wrote:

Sun, 03/27/2011 - 15:37 Comment #: 8

Thank you, Shaun. I'm glad you enjoyed the article. :)

Rob Bennett's picture

Rob Bennett wrote:

Sun, 03/27/2011 - 16:20 Comment #: 9

The article is right on. It's this type of article we all need more of, not the ones that list lots of numbers. Knowing the numbers doesn't help if you are using them for the wrong purpose.

I'll push this one step further. Lots of times the advisors are telling you the wrong thing because that is what you want to hear. You need to be paranoid even of yourself

We all have a Get Rich Quick impulse within us and we need to watch it carefully. Most experts don't see any money to be made in telling you where you are wrong. They will flatter you and their flattery will in the long run leave you busted. You need to be tough about your own self-deceptions.


Jessica Schmeidler's picture

Jessica Schmeidler wrote:

Sun, 03/27/2011 - 16:38 Comment #: 10

Well said! Thank you so much for your input. Skepticism should apply to our own motives and preconceptions, as well as to others whom we let influence us.