Advice Without Context

It’s tempting to expect a quick answer to every money question. But good financial advice depends on context — the details of your income, taxes, goals, and circumstances. In this video, Michael Alman uses a Facebook comment and a doctor’s-office analogy to explain why a real diagnosis has to come before any prescription.

Video transcript

Hello, this is Michael Alman with Patriot Asset Advisors, and today I wanted to talk about a comment a poster recently left for us on Facebook. The commenter was asking about the wisdom of taking out a second life insurance policy. At first, the question confused and even concerned me a bit — I honestly thought the poster might be trolling us, trying to get a reaction, or even setting us up for bad advice.

The more I thought about it, the more I realized this is actually emblematic of the way I used to think about financial advice before I came into the field. Thanks to a rampant authority bias, generative AI, and search engines everywhere, we’re trained to expect instant gratification for any issue we encounter. We’re conditioned to believe the answer is right at our fingertips. But in this case, as with most financial matters, that can be a dangerous assumption.

The real issue with the Facebook comment isn’t the question itself, but the lack of context around it. My first instinct was, why in the world would someone take out another cash life insurance policy? But then I thought a little deeper and realized there may be circumstances that would call for a second cash-value policy — and it might be the best move for that particular client. The point is, we don’t know from one line of questioning. If I gave financial advice based on that one question, I’d be at best guilty of ignorance, and at worst guilty of financial malpractice.

This is where a doctor analogy works well. Imagine you run into a physician at a restaurant and start describing your symptoms — say your stomach hurts — and without any further questioning, they write you a prescription and send you on your way. How would you feel about that? You’d probably think the doctor didn’t care, because they didn’t give you a full examination. Identifying the root cause of any problem requires a look at your full medical history and a proper exam. Advisers are no different. We’re here to help you reach your financial goals, but we can’t do that effectively or ethically without first understanding your situation and circumstances.

Asking the right questions should always be the first step of any new client-advisor relationship. Questions like: Do you have the income to get you through retirement? What’s your tax situation like? Do you have beneficiaries assigned? How much coverage do you actually have? Those are the basis for any real financial advice. If your adviser isn’t curious enough to ask meaningful questions, that should raise a red flag. In finance, as in medicine, be wary of an offer for a prescription instead of a diagnosis.