The simplicity paradox...

Keep it simple. I tell clients this all the time. I implore it. Our lives are already so complex on a day to day basis. Why purposely complicate things when you don’t need to….?

In hindsight things always seems so obvious and yet keeping it simple is so difficult for humans to do. In all walks of life, we are striving for the complex when the simple would work so much more efficiently.

I’m going to use a football analogy to outline my point. There is a simple pass available, nothing flash but player A has player B available with a simple pass. Player C is potentially available, but that pass is difficult and the possibility of it working is far less than the pass to player B.

Player A wants to try the difficult pass, the spectacular pass. Player A knows deep down that those difficult or spectacular passes are more difficult and will likely result in the loss of possession to the other side, but he decides that the simple pass is not exciting enough.

Footballers aren’t alone.

I can think of lots of parallels in the investment space. Investing in a single, well diversified, low cost investment fund can be all the investment strategy someone needs. This person doesn’t need to do anything, just buy the fund and get on with their life - or fund it regularly and again get on with their life. It requires extremely little management (if any), almost no hassle, minimal cost. Extremely simple and historically very effective.

However, millions of people - smart people - try to pick individual stock based on things they like or companies they use. They buy lots of different funds to do lots of different things. They check on the money every day, making changes when things don’t go so well, and they pay far over the odds for the privilege.

These people often spend time worrying about their choices, they spend time away from their jobs, or in evenings or weekends looking at their finances and studying the markets when their time would be far better spent living their life or focusing on what they do to earn a living. This focus is important because people who are able to fully focus on expanding their human capital (their ability to earn income as a human) have productivity levels above those that don’t.

The world of financial services is unfortunately a hugely complex area. There a lot of ideas, opportunities, rules, ways to do things and lots of people doing them, each with their own twist. One of our main focuses at Engage FS is to keep everything simple.

Wherever possible we try to keep all the information to a single page, a page that’s readable and digestible. We try to show figures, costs, returns etc in a manner that anyone can understand. It’s not always possible, but we do try our best.

We have conversations with clients in straightforward language and keeping things simple is at the heart of everything we do. If you’d like to simplify your financial world, get in touch for a free initial discovery meeting.