Advisors are important, not only for startups, but for life. We simply cannot know everything about anything, so at some point, if we want to make wise decisions in areas outside our expertise, we are going to need someone to give us advice. Who we chose as our advisors is key, as our decisions will be partly influenced by their judgment.
It is important therefore to really understand who is (or can be) our advisor and who isn’t (and will never be).
This might sound like nothing new to you, but I’ve seen several people fall into this mistake recently; a sales person ISN’T your advisor! Even if their business card says “financial advisor” or anything along those lines, they guy at the bank isn’t your advisor, you need to be able to tell the difference, he is a salesman, he doesn’t work for you, he works for the bank.
So how do we tell if someone’s advice is honest? Well, we can’t, but we can at least set the circumstances to make it more likely that it is. I believe it basically comes down to this: in order for advice to be valuable the outcome for the person giving the advice must be the same whether you take the advice or not. And when I say outcome I’m referring to anything from salary to a promotions, recognition or simple personal satisfaction.
Let’s think about the “financial advisor” at the bank for a minute. He probably gets periodical instruction from his superiors who tells him what products (savings accounts, credit cards, stock investments) they need to sell the most. He will then pitch those products to his clients trying to sell as many as he can in order to show his superiors how good he is at his job, maybe even get promoted eventually. His pitch is a sales pitch, not advice. You choosing to sign up for a new credit card actually has an impact on his performance at work.
On the other hand if your uncle, cousin, colleague or college teacher advises you to sign up for a new credit card you can consider their advice as honest, since they won’t benefit from your decision, and if they are any good at finances it might even be good advice.
So just keep in mind who the person works for next time you consider taking advice from someone and if your decision regarding that matter will have any impact on them or not.