Sometimes, people we know and trust don’t act as we hope. Do you forgive them? If you do, it’s because they are your friend.
But what if they weren’t your friend? You might feel differently. You could call the police or hire a lawyer because being ripped off isn’t right. In this case, you wouldn’t forgive them.
Why do we treat the same wrongdoing differently depending on who commits it? We forgive friends but not strangers.
Consider buying a washing machine. It uses more water and electricity than the salesperson claimed. That was a key reason for your purchase. Do you complain? If the salesperson was friendly, you might think they did their best and overlook the inefficiency.
It’s worse if you don’t even notice the inefficiency.
Financial advisers and wealth managers are usually nice and friendly. Their firms encourage this to make customers less likely to complain. It’s not right or wrong; it’s human nature.
As a customer, it’s important to understand the consequences of your purchases. In a few years, you’ll need to replace the washing machine, and your feedback will help you make a better choice next time. The consequences of a poor washing machine purchase are minor.
However, when it comes to investing your capital for the future, the consequences of poor decisions are significant. You rarely get feedback to measure outcomes. If your investments lose money, you ask questions. But if they don’t, you rarely question efficiency or check if the performance matches the risk you’re taking. The costs of allocating your capital are often unclear and confusing.
In the world of washing machines, if the salesperson says, “Don’t worry, it still washes your clothes,” and they are a friend, you might think, “Why am I worrying?”
When it comes to significant life decisions, while friendship is valuable, you must ensure you get what you pay for. If you lack the knowledge to decide, you need to pay someone to help you. The consequences are too important to leave to chance.