The dilemma of advice
Some colleagues at Irrational Agency and I have recently been working on a framework around advice, and a key dilemma: Those who know less about finance, are more in need of advice But those who know less about finance, are less likely to realise they need advice In some ways this is another form of Dunning-Kruger syndrome. But there's an interesting additional twist. Because advice is an information good , you can't make an informed decision about it before receiving it, because you don't know what the advice will be. And once you've received it, you may think you don't need it, because now you possess all the knowledge that the advice gave you! So an element of trust is required to make the decision to buy advice, as well as an element of self-knowledge. Neither of these things are in abundant supply in the finance industry. An outline of our analysis follows: The context : more and better quality investment is needed. Consumers need to make better financial retur...