Guest Post: Seduced By Complexity

As Barry Ritholtz once said, Carl Richards “has a wicked way with a Sharpie.” Armed with nothing more than a Sharpie marker and an equally penetrating mind, Carl has the ability to boil down complex financial issues into simple drawings. Carl has made an art of illustrating simply elegant charts & venn diagrams to communicate like no one before. And with his talent he’s sketched his way to become one of America’s leading financial planners.

His work at Behavior Gap is often highlighted in the New York Times where he is a frequent contributor to the Bucks Blog. And through his body of work Carl frequently reminds us that most of the work resides inside of each one of us.

In his latest book (currently #9 on Amazon’s personal finance reading list), he tells the tale of his personal mistakes with money and shows the rest of us ways to avoid making other common money mistakes.

“It’s not that we’re dumb. We’re wired to avoid pain and pursue pleasure and security. It feels right to sell when everyone around us is scared and buy when everyone feels great. It may feel right—but it’s not rational.”  

Carl wrote a fantastic piece about complexity in the financial services industry that I don’t think got enough attention, so I asked my good friend if I could share it with you. He’s said he’s delighted, and so am I — that he said yes. So, today I hope you gain some insights from what Carl’s about to share here.


Seduced By Complexity

Advisors propose complex solutions that raise more questions, making people feel like they’ve opened a Pandora’s box. But why?

By Carl Richards, CFP

Making smart decisions about money is rarely easy. It’s why people look to advisors in the first place. But often we as an industry make things worse. Instead of making things simpler, we propose complex solutions that raise more questions, making people feel like they’ve opened a Pandora’s box. But why?

The financial-services industry uses complexity as a sales tool. Like other sales-oriented industries, it uses the tactic of creating a problem, then providing the solution. To that end, the industry has identified as its main value proposition access to information and transactions, then presents this access as the solution to clients’ money questions. Think back to the early 1990s, before the Internet. It was a challenge to get basic information like a stock quote and almost impossible for people to calculate how their investment accounts had done at any of the major brokerage firms. The financial-services firms were the gatekeepers to information, and they’d set themselves up as the interpreters of that information.

Often, we think that if we have a complex problem, the solution should be complex, too. Some people in professional service industries view complexity as some sort of intellectual gift. Oliver Wendell Holmes said, “I would not give a fig for the simplicity this side of complexity, but I would give my life for the simplicity on the other side of complexity.” To Holmes’ point, the goal isn’t to search for the simplistic answers but instead to avoid being seduced by the idea of complexity. For too long, we’ve been accustomed to the idea that financial products, financial plans, and investments need to be complex in order to be effective. So, we start to reject some of the simple, basic concepts that will actually be far more effective in helping people make smart decisions about money.

This isn’t the first time I’ve talked about the value of financial advice that is simple, but not easy. However, I’ve noticed that despite claiming the goal of simplifying people’s lives, we sometimes are scared that people won’t value and pay for that type of advice. It reminds me of the person who goes to the doctor expecting to get a pill for high cholesterol and the doctor instead recommends a change in diet and exercise. It may seem like the pill is the simpler solution, but have you listened to or read the disclaimers that appear on all those ads? Pills are not without potential side effects, but exercise and diet? They’re the simple, but not easy, solution to the problem.

The same logic applies to good financial advice. Often the very things that will make the biggest impact on our clients’ financial lives are simple, but not easy. Saving more, spending less, even asking for simpler solutions are all things we can do. But we often pass them by because we’ve bought into the idea that our value hangs on being the gatekeeper to the complex. But complexity isn’t the silver bullet to financial questions. Isn’t it time we help people discover the simplicity on the other side of complexity?


I couldn’t agree more, thanks Carl!

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3 thoughts on “Guest Post: Seduced By Complexity

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