My furnace was not working properly today, so I’ve asked a company to come by and look at it tomorrow.
The last time I had someone look at my air conditioning unit, they told me I needed to replace it. They then sent their salesman by to pitch a new unit.
This time, they might be able to fix my furnace. Or, more likely due to its age, they will advise me to replace it. And if they do, I won’t know whether to trust their advice.
Why? Because they are financially incentivized to sell me a new furnace.
It’s almost impossible to be neutral (although, I am not suspecting them of lying to me) when there’s a big fat paycheque behind the option to replace it.
So I need to be at least a little bit critical.
Contrast that to the firefighter who tells you to replace your smoke alarms every few years. Unless you have doubts about their intelligence or they are heavily invested in fire alarm stocks, you can assume their advice is good.
Or, at very least, it’s not motivated by any financial incentive.
The point is, when taking advice from someone who’s financially incentivized by the implementation, you’re forced to educate yourself and consider whether the advice you’re getting is right for you or not.
In other words, the advice is and should be taken as a sales consultation.
That doesn’t mean you can’t trust people who sell advice and implementation. There’s absolutely nothing wrong with it in practice.
But it’s not the highest form of advisory work you can do. It puts you in a sales position because you must constantly balance the incentives of your clients and your own.
To be a truly trusted advisor, you need to maintain a fiduciary standard, which usually means not selling the advice AND the implementation of that advice.
Removing the financial interest makes you more neutral, which is subtle but a big difference in how it feels to to buy your advice.