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Advice and Probabilities

By February 28, 2023February 2nd, 2024One Wealth Perspectives

I went to the doctor today. I’d been having trouble with my allergies and sleep. The doctor prescribed me a medication to use in conjunction with the allergy medicine that I already take. That first medicine was supposed to have worked on its own. It did initially, until it didn’t. All of this got me thinking about advice and the fact that nobody can ever give advice on any subject that is, with 100 percent probability, going to be “right.”

Doctors base the advice they give on their assessment of historic, probabilistic outcomes. If a drug has worked 95 percent of the time and has limited side effects, they are probably pretty confident in advising you to take it, but they are not 100 percent certain. Same with lawyers. They are never certain that how they recommend you handle a legal situation will result in the way they hope or expect it to, but they will base their advice on their sense of the highest probable best result.

In the Financial Life Planning that we do, we are never 100 percent certain of any of the advice that we give. Our practice in this work began 32 years ago, and I believe one of the things that such a long tenure can provide is the ever increasing ability to accurately assess the probabilities of the situations we are advising on and give appropriate advice that we feel has the highest likelihood of being “right.”

The last thing I would have wanted when leaving the doctor’s office today would have been for him to tell me that there were 4 or 5 options for me and that I had to choose one. Maybe that would have allowed him to feel as though he would be sharing the responsibility with me if the outcome were to be disappointing, but I would have left feeling unsure of the decision to take the additional allergy drug. I like to think we do the same thing for our clients. We are usually specific in what we recommend, which we hope gives our clients confidence in that decision, but we do so after assessing the probabilities to land at the most “right” advice we can give.

The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor.