Devil’s Advocates Can Enhance Your Financial Decisions
Posted on June 8, 2007
By definition a devil’s advocate is an official selected to critically examine the facts and raise objections in the case of a person named for beatification or canonization in the Catholic faith. I define it as a carefully selected individual that you can trust who will play such a role in your financial decision making. Having a personal devil’s advocate can be like having brakes on a car rushing downhill. This trusted confidant can often get you take a second or third look at hastily made decisions and prevent your enthusiasm from sending you plummeting into financial disasters.
Many people see an advertisement or an infomercial on television that looks almost too good to be true and they make hasty decisions to change the direction of their life. Others let good salespeople persuade them to make quick decisions that often land them in unnecessary debt. I call these people dream chasers. Look around and you will see them everywhere; changing jobs, changing careers, moving to new areas, enthusiastically chasing one dream after another and never realizing any of them. It’s unfortunate but it’s true and entire industries have been built around preying on people like this.
Fortunately there’s a way to guard against impulsive actions. Throughout my adult life I’ve surrounded myself with people I could use as sounding boards when I had a new idea, or thought I had found a great opportunity. These people have ranged from my mother and father to attorneys, accountants, bankers and other individuals with whom I felt comfortable enough to discuss financial decisions. What’s important is that these not be people who agree with whatever you say. They aren’t supposed to be cheerleaders. As personal devil’s advocates, you want these advisors to point out weaknesses and pitfalls in your thinking process and help you develop plans to deal with them if they occur.
Using a devil’s advocate is not easy. When you think you have a great idea or have found a fantastic opportunity, the natural reaction is to seek out people who will agree with you and reinforce your position. It is a well known fact that once people make a decision their attention turns to reinforcing that decision. Having supporters is great, but don’t ride them like a surfer on a wave and let their enthusiasm run you aground.
Throughout life everyone faces decisions and opportunities that look good on the surface, but lose much of their luster once a few layers are peeled back. I’ve learned that truly good decisions or great opportunities stand up to examination, but because of my emotional involvement, I often need the assistance of a disinterested party to help me properly scrutinize them. When I seek advice from my advisors, I ask them if they see anything wrong with my thinking and I don’t get offended when they do. This helps me develop alternatives and be prepared in the event things don’t go as planned.
Just as personal character is formed in the crucible of hard times, financial success is nurtured and developed by people who aren’t afraid of scrutiny. Devil’s advocates are the whet stones that sharpen your decision making. Without them, it’s difficult if not impossible to cut through the hype and rhetoric of the marketplace and position yourself to become a wealth builder.
Here’s a tip! Think about the people you know. Who among them would you want as your devil’s advocates? They must be people who can provide honest feedback without being intimidated by you or become jealous when you achieve success. Once identified, you need to let them know that you want them to be brutally honest with you; that you expect them to take an adversarial position and force you to defend your thinking. Believe me; it’s better to do this practice exercise with a confidant than to do it the first time when it counts.
Think of this the way a football team does about holding a practice scrimmage. They go through all their offensive and defensive plays in an attempt to prepare themselves for whatever the opposition can throw at them. The better job they do preparing for the eventual contest, the more frequently they win the game. That’s the same thing you will be doing when you try to make your case and have to go back and forth with your devil’s advocates. It helps you evaluate a situation and prepare yourself for obstacles in the event you make a decision to move forward with it.
Unfortunately, very few people go through this exercise and as a result are derailed and discouraged by obstacles that those who are better prepared take in stride. Just remember, anyone can do well when everything is going their way. As they say, even a dead fish can swim downstream. It’s how you perform during difficult times that determine your success in life and using devil’s advocates is a great way to prepare for the bumps we all encounter on life’s highway.
Here’s a caution! Devil’s advocates should be viewed as coaches whose role is to make you better. They should be people you respect, not social friends. Friends will be reluctant to take the adversarial positions you need them to take for fear of ruining a friendship. Once you understand this, you will find that devil’s advocates can definitely enhance your financial decisions.
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