Towards the mid-1900s, science and technology had advanced in giant steps.
Healthcare was one such field.
Thousands of new impactful discoveries were being made. Example: cigarettes are harmful to health.
Various scientists were exploring the link between heart disease and certain foods.
A few Harvard scientists published their study: heart disease was closely linked to fats. Sugar didn’t have a big role.
In 2016, reports claimed that the scientists had taken money from a sugar industry body.
They had intentionally downplayed the role of sugar in heart disease.
Some of these scientists went on to hold very senior positions in American government offices and universities.
Research like this influences the government’s nutritional guidelines and health policies.
Neither the scientists nor the sugar industry executives from back then are alive today.
But decades of policies and plans were made based on some bad advice by these scientists.
There is a peculiar problem with bad advice. It is hard to catch if you don’t understand the topic.
And if you do understand the topic, you don't need the advice.
Needless to say, the problem of bad advice plagues the world of finance to quite an extent.
Many people simply look at one trait to determine if a person is giving good advice: confidence.
Obviously, this is a bad strategy.
The problem can not be solved very directly. But there are indirect methods to reduce the chances of receiving bad advice.
How does the advice giver benefit from the advice?
This one question is incredibly effective and potent.
If you ask a barber if you need a haircut, they'll mostly say yes.
Back then, there were no regulations mandating that scientists reveal conflicts of interest.
Technically, they were mostly operating in the right zone. Today, rules mandate revealing sources of funding for research as well as conflicts of interest.
And what happens when something goes wrong?
Do the advice givers stand to lose something valuable? Any material or monetary loss? Does the advice giver fear for their reputation?
Do they have skin in the game?
If someone has nothing to lose, they may be tempted to be dishonest.
The scientists were not running a business or fighting in a war. No matter what happened, they wouldn't lose much
It isn’t just intentions.
Bad advice can come from well-intentioned people too.
Someone could be wrong simply because they’re not aware of what's right.
This is how research mostly works. Science is constantly progressing and new information keeps coming to light.
Scientists, like everyone else, make mistakes and learn new things.
This is why track record and reputation are vital.
If someone has been doing something for a long time, and have shown good results over that period, chances are, they are indeed good.
Reputation is built with great difficulty and destroyed very easily.
Someone with a good reputation is likely to work hard to preserve their reputation.
In moments like these, a third person’s opinion is valuable.
If there’s someone you trust, and that person vouches for the advice giver, you can draw some conclusions.
A good expert would have been useful to other people.
And a bad expert would have hurt other people.
Mind you, none of these are hard rules.
There will be times when you will have to ignore some signs that may appear negative but aren’t negative. Vice versa too.
After having written so much about taking advice, you might be inclined to think avoiding bad advice is complicated.
Fortunately, there is one measure you can take that has a massive effect.
Educate yourself.
Financial education reduces the chances of getting bad advice.
Greater the education you give yourself, the lower the chance of receiving incorrect advice.
This doesn’t mean if you educate yourself enough, you’ll never need advice.
Nobody knows everything. We all need advice from someone or the other at different points.
Even Warren Buffett said he sought advice from someone when investing in China and when learning more about the pandemic.
You should at least know enough to be able to receive good advice.