I think advisory work is expected to produce a stream of earth-shattering insights.
When in reality it’s likely that one piece of advice towers over the rest.
And it’s that single piece of advice that carries the economics of the relationship.
It was a comment I made about portfolios last week that prompted me to think about how the ROI of advisory is actually evaluated.
Because when I think back to some of the best advice I’ve given or received, the pattern looks surprisingly similar to investing in startups (i.e. angel investing).
The general scatterplot of a successful angel portfolio tends to look like this:
10 investments lead to...
↓
7 that breakeven (or lose).
2 that perform really well.
1 that returns 100x.
It wouldn’t be fair to an angel investor to be judged on the individual bets.
Because that’s not how it works.
And so to with advisory.
I have to be careful though. I’m not saying that a majority of advice fails the value equation.
Some advice creates clarity.
Some prevents regret.
Some increases conviction.
But if one insight carries most of the value, then the obvious question becomes:
Which one will it be?
And of course, nobody knows beforehand. That’s the gamble. Because advice is contextual. The same sentence delivered to 100 people can produce wildly different outcomes depending on time, incentives, trust, and circumstances.
fewer bad moves
faster decisions
less wasted motion
more confidence
better timing
…and once in a while…
one small reframe that pays for the engagement 100 times over.
Maybe this is how we should set expectations on what good advisory looks like.
Not a constant stream of brilliance. But a process for increasing the odds that the insight that matters gets surfaced before it’s too late.
Thank you for reading.
Be well. Talk soon.
— Peter
P.S. My thinking on advice and advisory work keeps evolving. This is just the latest thought in a long trail of partially-baked theories I’m trying to make sense of in public. As always, perspectives welcome. Reply and tell me what I’m missing.
