The Curse of Knowledge

Matt ReinerAdvisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.

The more we know about a subject, the more we assume others know about it. The longer it’s been since we learned something, the harder it is to imagine what it’s like to not know it. You can’t imagine what it’s like to be a baby who doesn’t know how to speak or walk, for example.

There’s also a good chance that you’ve been immersed in your role as a financial advisor for so long that you can’t imagine what it’s like to not know how the stock market works or how to put together an investment portfolio that provides decent returns without exceeding your client’s risk tolerance.

Academics call this phenomenon “the curse of knowledge,” and it may be the reason you’re having a hard time attracting new clients or even retaining new employees.

Brains are biased

The curse of knowledge is a cognitive bias, one of those systematic errors in thinking that occurs because of the human brain’s inherent desire to find the path of least resistance – even if it means taking cognitive shortcuts and using a flawed internal model of reality.