Partners' Network

Free Advice is Worth Exactly What It Costs


I make it a point to never provide free advice, i.e., advice to someone that isn’t a paying client. The reason for this is that it is usually out of context, the facts could be misrepresented, essential information could be omitted or the person talking is saying something different than what they mean.

This has been a rule for me for many years, but I recently slipped up on this.

Here are some illustrations of why I do not provide “free” advice:

  • I’ve had friends involved in matrimonial disputes ask “advice” about a specific issue when it turned out that they were asking about something peripheral to the entire situation, and while my answer might have been a perfect answer to the question, it actually was not relevant to the situation at hand.
  • I’ve had friends ask me about employee benefits they were offered, and while I might have provided a perfect answer to their questions, I likely could have helped them get much more if I knew all the facts.
  • I was once asked what the best entity would be when a business is being started without being told that one of the investors was a non-resident alien of the U.S. If I had known that, I would have suggested a much different format.
  • I also get asked regularly what the annual gift tax exemption is, and while I can easily provide the number, understanding the reason why that was asked can lead to some significant estate planning maneuvers.

The above situations are just a few of the many reasons that led to my decision, early on in my career, to not give “free” advice.

Well, I recently broke that rule and it got me upset at myself. A friend asked me a question about how he could secure his financial future for the rest of his life, no matter what, after giving me a rundown of his situation. About two months later he called and told me he met with another friend who gave him completely different advice since…and he laid out more of his full situation (none of which he shared with me initially). At that point I realized that I did him a disservice by telling him anything. I should have suggested he retain a professional to provide him with advice and a plan after reviewing his entire situation along with the battery of probing questions that typically accompany such consultations.

So, going forward I intend to reaffirm my resolve not to provide financial advice unless I am retained. My advice to my readers is that free advice is usually worth exactly what you pay for it. Nothing! And sometimes it could hurt you.

If you have any tax, business, financial, leadership or management issues you want to discuss please do not hesitate to contact me at [email protected].


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