The advisors a President surrounds himself with determines the quality of decisions he makes. The same is true of CEOs. The same has always been true of anyone in power.

Kings and generals have always depended on expert advisors to help them make decisions.

For all of history, this was a skill that only mattered for a select few. Now it’s important for each of us.

As software and machines continue to leverage our effort and multiply our productivity we all find ourselves relying on experts. Experts can come as coaches, advisors, and consultants. They also come as authors of books, blog posts, and news articles. Or YouTube stars or podcasters…

You are exposed to many experts every day. People who form your opinions and help direct your actions. In fact, there are way too many of them.

It’s more important than ever to be conscious of the experts you let advise you. The information you take in defines your perspective on the world. Bad information means bad perspective.

Being able to effectively find and use quality information is more important than ever as technology adds leverage to your actions and beliefs.

The economist Tyler Cowen recognized this early on and wrote about it in his book Average is Over:

“High-skilled performers, including business executives, will have some kind of coach. There will be too much value at stake to let high performers operate without a steady stream of external advice, even if that advice has to be applied rather subtly. Top doctors will have a coach, just as today’s top tennis players (and some of the mediocre ones) all have coaches. Today the coach of a CEO is very often the spouse, the personal assistant, or even a subordinate, or sometimes a member of the board of directors. Coaching is already remarkably important in our economy, and the high productivity of top earners will cause it to become essential.”

I’m going to give you 13 ways in which you can select the very best experts to surround yourself with. First, a 60-second story about one of the best executive coaches in the world…

***

I knew him as the family friend from across the lake that sunbathed like it was his job, refused to talk politics, and was somehow always relaxed.

Then I found out he worked with top executives at Goldman Sachs, Ford, various hedge funds and other Fortune 100 companies.

I immediately asked him for all his secrets. I was young enough where this came off as charming instead of rude (I hope). This is the stuff he got paid hundreds of thousands of dollars for, now he was going to share it with me, for free…

“Write two lists: the first of your strengths and the second of your weaknesses. Now focus on your top three for each of those.”

I thought he was joking. Nope.

He continued on with similarly basic advice. I sat staring, slack-jawed, wondering how the hell he pulled off this con on some of the most powerful people in the country. Everything he said I had read in all the standard self-development books.

What was his book recommendation?

“Science and Health: With Key to the Scriptures,” an interpretation of the Bible by Mary Baker Eddy, the founder of Christian Science. What?!?

I didn’t understand–he wasn’t a spiritual adviser, he was paid to help these executives perform better.

The most interesting thing about this exchange was how uninteresting it was.

Nothing new, no secrets, no magic.

What was it then? Why was he so sought after?

***

That was three years ago.

I’ve spent much of those years questioning whether experts are worth listening to at all.

There are good reasons for this, according to Vanguard, 72% of mutual funds benchmarked to the S&P 500 underperformed the index over the 20-year period ending with 2010. That means that 72% of mutual funds are charging people a ton of money to do worse than the default.

Beyond poor performance, experts’ incentives are rarely lined up with your interests, their ego gets in the way of helping, they think too narrowly, they think they know more than they do, and it’s nearly impossible for them to admit that they’re wrong (they weren’t hired to be wrong). In all honesty, I despised them.

Then I looked in the mirror and realized something… I’m an expert. I’m an advisor and coach.

Shit.

It was time to reconcile my paranoia and disdain for people who “know better” and my own work (which I objectively know does a lot of good for a lot of people).

It’s obviously important to use advisors, coaches, and experts. We just have to learn how to recruit them correctly.

The problem of selecting and using expert advisors is only going to become more prominent in the coming years. Cowen predicts that, “Expert coaching or motivating will be a competitive growth sector for jobs,” and I suspect he’s right. Just look at the number of people publishing Kindle books and starting blogs… everyone’s an “expert”.

Each of us now has the responsibility of choosing our cabinet of experts.

You don’t need to hire someone for this to matter. Most of our advisors come through books, blogs, videos, and people we talk to throughout the day.

You need a set of tools to make the most of the good advice you get, navigate the contradicting advice, and discard the bad. That’s what we’ll focus on for the rest of this article.

 

How to Answer: “Who should you listen to?”

1. Incentives

This is the only thing that must be right. Steven Levitt, the economist of Freakonomics fame refers to an incentive as, “a bullet, a key: an often tiny object with astonishing power to change a situation.”

Warren Buffett once quipped that he could end the US deficit in 5 minutes:

“You just pass a law that says that anytime there is a deficit of more than 3% of GDP all sitting members of congress are ineligible for reelection.”

It’s not just actions that are shaped by incentives. Even our fundamental belief systems can be formed by incentives.

Buffett’s partner Charlie Munger says that, “If you would persuade, appeal to interest and not to reason. The man changed his view when his incentives made him change it, and not before.”

It is a simple idea, but excruciatingly difficult to execute on. Many experts who you would assume have aligned incentives actually don’t.

Hedge fund managers are incentivized to bring more money under management and make massive returns, not to preserve your capital. If they lose your money, they take their management fee and let you keep the downside. If they make a ton of money, they get 20% (or more) of the upside. They are incentivized to act carelessly.

You would assume incentives would be straightened out when there are billions of dollars at risk, but they absolutely aren’t.

Peter Thiel, founder of PayPal and billionaire investor, believes that one of the key reasons biotech has been lagging is because the scientists involved in these companies are rarely properly incentivized. They act more as consultants than owners.

The question then is: How can we get a consultant to act as an owner?

Proper incentives.

They should win when you win and, ideally, lose when you lose.

That second piece is harder to accomplish, but having skin in the game changes everything.

Most people get most of their advice from reading, it’s important to check incentives here as well.

Ask yourself before reading a book or blog post, “Why did this person write this?”

Are they trying to get you into their sales funnel? Did they have to write five blog posts that day? Did their boss tell them to promote something? Are they just passionate about figuring something out or sharing an idea? Do they just need to be heard?

Selling isn’t bad, by the way. I hope you buy something from me.

Alright, that was really long. The others won’t be.

Remember:

Is this person incentivized in a way that benefits me?

2. What are their ideologies?

What are the fundamental assumptions they have about the world, your industry, and life?

If you’re working with a paleo-obsessed nutritionist, make sure it doesn’t disagree with things that science has proven.

If your financial advisor is heavily invested in 3D printing, verify his claims about food being printed instead of cooked.

We all work from a base set of assumptions that frame our worlds. Make sure you’re okay with the ideologies of the expert you’re considering.

And make sure this ideology works as an incentive in your favor.

3. Private testimonial from someone with a clear head.

Talk to someone who has successfully used their services and has no incentive to sugarcoat anything.

A testimonial from someone walking out of a Tony Robbins event isn’t useful. A testimonial from someone who went to a Tony Robbins event 5 years ago? Much more reliable.

People who are good at what they do aren’t afraid to make these available. I invite people regularly to talk to random clients if they doubt the effectiveness about our importing coaching program.

4. Can they talk about specifics or do they only speak about vaguely promising potentials?

I’m not saying they need to be able to tell the future, nobody can, but it’s a serious red flag if they avoid answering your question straight on.

5. Guarantee.

Is there a promise of something working? There doesn’t always need to be, but it certainly helps.

The best surgeon in the world can’t guarantee the operation will work. Warren Buffett can’t guarantee you’ll make money buying Berkshire stock. (In fact, he usually recommends you don’t buy it.) The psychologist can’t guarantee you’ll never get depressed again.

Some things should be guaranteed, though. You know them when you see them.

6. It should be expensive.

Cheap advice is worse than no advice. A crappy life coach is going to make your life worse, not better. A crappy consultant is going to bankrupt your business, not increase profits.

This isn’t to say that expensive life coaches or business consultants are going to offer any guarantees, but you’ll have a much better chance.

We also tend to take action on advice that we’ve paid for. Paying what feels expensive acts as a commitment device. When I pay a couple thousand dollars for a program I’m going to use it for all it’s worth.

“Cheap” can also mean advice that feels good to hear but doesn’t have any substance.

7. Ignore their origin story, focus on now.

This can be impossible sometimes, but at least be aware that it’s been consciously shaped… sometimes out of events that never happened.

Someone’s origins have little to do with the work they will do for you. If it does matter, it will be the origins that they don’t want to tell you about. What matters more is what is going on in their life right now.

If they are getting divorced, in debt, or in any other kind of desperate situation, they’re incentives are all out of line. Their advice will be heavily influenced by their current needs.

8. Keep your expectations in check.

As we learn to use advisors and experts we want it to be simple. We want to find the one person with all the answers. There are plenty of people who will tell you they do, indeed, have all the answers.

This kind of arrogant certainty should immediately filter out a large group of experts.

It’s better to find someone a little less confident who knows what they don’t know.

Remember, an expert is a person who has focused on a subject. This is worth quite a bit, but never as much as we think.

Lincoln created a “team of rivals” so that he might get both sides of every story and weigh them as fairly as possible. This is what you should aim for.

Resist the temptation to hire “shamans” or “sages” who pretend to know the future with certainty.

9. Are you willing to put the work in?

If you’re hiring a trainer to feel good about yourself but know you’re not going to get to the gym, then forget about it.

If you’re hiring an editor but aren’t willing to go through more drafts, don’t bother.

Every day people email me, “I want to start a business.”

I give them an idea of how and they reply about not having time.

They don’t want to start a business; they want to have a business.

A trainer cannot do your pushups for you. A priest cannot pray for you. A yogi cannot meditate for you. A therapist cannot accept you for you.

It’s still all on you.

10. Be honest about why you’re getting an expert.

Business consultants are often hired because an executive is afraid to be blamed for a decision.

A trainer is rarely hired for his fitness knowledge. We just need someone to push us.

Be honest with yourself: maybe you just need someone to motivate you.

It’s difficult to admit this. We think we ought to be able to motivate ourselves. It’s weak to need support.

Knowledge isn’t what we’re lacking anymore. As information becomes ubiquitous the role of the teacher shifts from disseminating information to making people care about that information. From Cowen’s Average is Over:

“The professor is then a good motivator first and foremost. Let’s hire good motivators. Let’s teach our professors how to motivate. Let’s judge them on that basis. Let’s treat professors more like athletics coaches, personal therapists, and preachers, because that is what they will evolve to be.”

The executive coach I introduced you to at the beginning of this article wasn’t a business genius. He just understood the fundamentals of humans.

He wasn’t valuable for having clever tricks up his sleeve. He was valuable for guiding his clients’ attention to more useful places at the correct times. He was valuable because he could frame things for his clients so they could think more clearly about them.

We tend to overvalue new knowledge and undervalue the proper application of existing knowledge. Being aware of this will help us in understanding what experts we need.

11. Do not hire a mentor; hire an expert advisor.

You don’t want to confuse these. Both of them know more than you and both are supposed to help you out. That doesn’t make them the same.

The biggest difference is that a mentor is invested in your life in general while an expert advisor is invested in helping you in a specific area.

While an expert advisor can transform your life, you shouldn’t trust them to care about it.

12. Indicators of expertise aren’t enough.

If a hedge fund manager has had 5 years of stellar returns, chances are pretty terrible he’ll continue into his 6^th. It’s important to know why this person has been successful, will that strategy continue to work?

Paul Graham is one of the most successful investors in Silicone Valley and lives at the cutting edge of technology where new areas of expertise pop up overnight and disappear just as quickly. He has this to say about expertise:

“In practice “sufficiently expert” doesn’t require one to be recognized as an expert—which is a trailing indicator in any case. In many fields a year of focused work plus caring a lot would be enough.”

If we can recognize expertise before others call it expertise we can get a great advantage.

Currently, there are few expert “data scientists.” Barely anyone knows what it means and nobody is handing out degrees for it. We’re all aware that they (like “growth hackers”) are important but don’t have a great way to test for expertise.

A degree won’t work (there aren’t any), a track record won’t work (it’s too new to have any), so only current performance and a bet on character can work.

13. Maintain self-reliance.

Hiring an expert creates a tension between trusting yourself and trusting others.

Just because someone knows more about food than you doesn’t give them the final say about what the right diet for you is.

Just because someone knows more about marketing than you doesn’t mean they know what campaign is best for your business.

You need to lean on others a bit for support and new knowledge, but you cannot forget your core. Too many CEOs are ruled by consultants. Too many people are ruled by priests, gurus, or scientists.

It’s about collecting data, ideas, and perspectives. Like Lincoln and his team of rivals, you are the only one who can make the final call. (Or do the pushups.)

Paul Graham, in the same essay on expertise quoted earlier, wrote:

“It seems to me that beliefs about the future are so rarely correct that they usually aren’t worth the extra rigidity they impose, and that the best strategy is simply to be aggressively open-minded. Instead of trying to point yourself in the right direction, admit you have no idea what the right direction is, and try instead to be super sensitive to the winds of change.”

There is no better way to become “sensitive to the winds of change” than having a team of experts (coaches, books, advisors, communities).

The post Who Should You Listen To?: 13 Steps to Choosing the Best Coaches, Advisors, and Authors appeared first on StartupBros.