What is Wisdom?

Ben Coombs has been a long-time friend of Money Quotient as well as an enthusiastic cheerleader and collaborator.  Therefore, I took special note when Michael Kitces invited Ben to publish a guest post on kitces.com titled “10 Wise Lesson Learned About Being A (Better) Financial Planner”

In his introduction, Michael explains that Ben was a member of the very first graduating class of CFP certifications in 1973.  In addition, he was a veteran mentor of the FPA Residency program where he first shared his thoughts on the 10 underlying “truths” he had learned about being a better financial planner.  The entire essay is a classic, and one that you should read in its entirety, but for the purpose of this MQ blog post, I’ll focus on Ben’s #1 Truth:  YOU’RE ONLY AS GOOD AS YOUR SOURCES OF INFORMATION:

Information is power.  It is one of the things that set you apart from your competitors. As a result…

Carefully choose your sources of information to be sure they expand on each other and are not redundant. It is easy to keep hearing the same thing in different forms, and be led into thinking you are getting new information, instead of the same information repackaged.

Understand the biases of the source of information, because biases slant the information to suit the bias. All information comes slanted by bias.  Your job is to understand the bias, so you can filter it out.

Information is not wisdom. Wisdom is needed when you apply or use the information.  Wisdom comes from experience.  Most importantly, however, it comes from caring.  Wisdom resides in the heart, not the head.

So, be hungry for information that amplifies your professional capacity, that is filtered for biases and apply it with wisdom.

I love that Ben highlights “wisdom” as the most important quality of an exceptional financial planner. But, what is wisdom exactly?  And, how is it developed?  In a Huffington Post article, Gregory Beyer wrote:

Wisdom is high on the list of personal qualities we prize. Yet even though most of us recognize that being wise is entirely different from other markers of success—such as being rich or famous or even a genius—wisdom is a difficult quality to define.  Do we truly understand what it takes to be wise?

Once considered the domain of philosophers and spiritual advisors alone, the concept of wisdom has become fertile ground for academic researchers as well.  One pioneer in this field is Ursula Staudinger, currently a lifespan psychologist at Columbia University.  In 1980, she was among several prominent psychologists who launched the Berlin Wisdom Project and gave credibility to the study of wisdom. 

This topic may seem esoteric to many, but is critically important to understanding personal satisfaction and well-being—the primary focus of the MQ approach to financial life planning.  Staudinger believes that true personal wisdom consists of five elements:

  1. Self-insight
  2. Ability to demonstrate personal growth
  3. Self-awareness in terms of historical era and family history
  4. Understanding that priorities and values are not absolute
  5. Awareness of life’s ambiguities

Other researchers point to “reduction of self-centeredness” as an important characteristic of wisdom.  This is often demonstrated in one’s ability to regulate their own emotions.  In addition, Laura Carstensen, professor and director of the Stanford Center on Longevity, contends that wise individuals are not only able to control their own emotions, but are also aware of and able to attend to another person’s emotional state. She explains,

You’re not focusing so much on what you need and deserve, but on what you can contribute.

This perspective is also in alignment with Erik Erikson’s “Stages of Adult Development” model, and his view that an important milestone in the development of wisdom is the struggle between generativity and self-absorption. Erikson defined generativity as caring for the next generation and future generations, and he defined self-absorption as caring only for oneself.

...an important milestone in the development of wisdom is the struggle between generativity and self-absorption. Click To Tweet

In addition, he referred to this struggle as a time when men and women examine their lives and think about where they have been and where they are going.  They also start thinking about their own mortality.  In their dismay about getting older and not having experienced or accomplished what they imagined they would, many try to recapture their youth.  Some fall into despondency and make drastic lifestyle changes that end up hurting themselves and others. 

In contrast, other individuals go through this time with greater clarity about what is important to them, renewed enthusiasm for becoming all that they can become, and a stronger commitment to making a difference in the lives of others.  In my opinion, and I’m sure Ben Coombs would agree, this is truly the hallmark and the reward of “Being a Better Financial Planner.”  As John Kotre wrote, in his book Making it Count,

Deep satisfaction can come when a life is lived with generativity in mind—a sure knowledge that one’s life has counted.

-Carol Anderson

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  1. So many fine and inspiring points for consideration, Carol. Thank you for taking time to share this bit of wisdom!