Every day, we make decisions based on what we know and believe.
We make simple, mundane decisions hundreds of times a day about what we are going to do, who we are going to meet or where we are going to eat.
Some of these decisions turn out to be bad ones, but there is little risk in making a bad decision. What’s the worst that can happen?
Bigger decisions require more thought. You wouldn’t make a decision on hiring a general contractor or a new nanny using the same simple decision-making process as ordering something from Starbucks (i.e., it looks good), would you?
Far too often, in making these big decisions, we make the wrong choice. It usually comes down to one thing: We didn’t have enough information to make an informed decision. We didn’t know that the general contractor had a bad reputation or that the nanny was fired from her last two positions.
Now what about the potentially life-altering decisions? Doesn’t it make sense to dig through the depths of hell to find out about your new business partners, find out if there are any skeletons in the closet of the investment manager that you just handed your life savings to, or dig into the past of your trusted confidant who has access to just about everything in your personal life?
Have you heard stories about a business partnership gone sour, only to find that the new partner had a shady background?
Have you heard stories of wealthy individuals losing money to a financial fraudster or Ponzi scheme, only to find that there were hundreds of red flags that should have been seen?
Have you heard stories of a trusted employee stealing money, only to find that the “trusted” employee had stolen from people before?
This is all avoidable. You have to be willing to accept that you don’t know everything and that someone may not be totally forthcoming.
Our natural tendency is to trust what we see on the surface, but in hindsight, we may realize there was something lurking below.
The problem is that most people learn from their mistakes, but by then it’s too late.
So put on your fedora, grab your pipe and look beyond the obvious. Be skeptical. Be critical. Ask difficult questions. Don’t assume anything.
Because what you think you know may not be true at all.