When you need to fill crucial gaps in your knowledge, turning to experts can make sense. But you have to be careful in taking their advice. Even if things work out once, there's no guarantee that so-called "experts" know what they're doing.
Der fuhrer's digestion
You'll find an excellent example of this, oddly enough, in World War II history. A recent article from Drexel's The Smart Set talked about Adolf Hitler's digestive problems. As most people would, Hitler consulted an expert -- a doctor who had once successfully cured a case of eczema on his leg.
Yet according to the article, the doctor made things far worse. Among the medicines he prescribed were pills containing both strychnine, a poison, and antropine, which causes severe mood swings. On top of that, the doctor gave Hitler amphetamines, which worsened the mood swings and added paranoia to the mix. In fact, it seems the good doctor was giving Hitler nearly 30 different drugs regularly, including cocaine-laden eye drops. Did they help? According to the expert's own diary, apparently not. Hitler's digestive woes persisted.
Even though other doctors urged Hitler to get rid of a man they considered incompetent, Hitler remained fiercely loyal to his doctor for eight years, even as his health deteriorated.
Our own quacks
Believe it or not, I think this article contains some great truths and cautions for investors. Think about the so-called "experts" we often turn to for financial advice. They often become famous because of one good call -- such as predicting a stock market drop right before one happens. (Remember, with so many prognostications issued regularly, a few will inevitably end up being correct.)
Many "experts" promise us riches -- usually if we attend a $5,000 seminar they're holding. Are they wealthy and successful because of the lessons they're teaching, or because they're selling seats at expensive seminars?
Even less flashy advisors, such as the brokers who manage your money, have their pitfalls. Some may be terrific, but others are not so good at what they do, buying and selling actively in our accounts, racking up lots of commission costs and tax hits, and often underperforming the market.
Still other financial advisors have other conflicts of interest. Some, for example, are paid by an insurance company when they sell us a policy. Such folks may not always be selling us the product that's best for us -- especially when another product will keep a roof over their heads, and pay their kids' private-school tuition.
What to do
You might think that I'm about to urge you to forswear all experts and advisors. Nope. Many of us need guidance to best manage our money, and some experts are actually very good and helpful.
Go ahead and seek outside advice if you're not comfortable calling all your own shots. Just do so with your eyes open. See how any given expert is being compensated. Check their long-term track record.
You can learn how to save lots of money and invest it effectively by taking advantage of a free trial of our Motley Fool Green Light newsletter. It's prepared by two very savvy Fool staffers, Dayana Yochim and Robert Brokamp, who aim to deliver at least $450 in savings ideas to you each month (along with specific stock and fund recommendations). It won't do much for digestive dilemmas, but a free trial will give you full access to all past issues.