Ben Johnson, CFP®, RLP®,AEP®,MS
Providing Clarity, Confidence, and Peace of Mind to your Financial Plan, so you can Enjoy Life Now and In the Future.
October 21, 2025
In a world where innovation and complexity reign supreme, it’s easy to believe that the best financial solutions must be intricate or high-tech. Financial markets themselves are often described using words like “sophisticated,” and many investors are drawn to elaborate investment strategies promising outsized returns. Yet, time and again, both research and real-world experience reveal a timeless truth: simple is better than complex, especially in the realm of financial advice.
The Lure of Complexity in Finance
The financial services industry is notorious for rolling out new products, strategies, and jargon. From exotic derivatives to structured notes and quant-driven portfolios, investors are continually bombarded with choices that seem tailored to edge out the competition. For many, the more complicated an investment appears, the more effective it must be.
But why is complexity so alluring? There are several reasons:
· Illusion of Control: Complex models and products give the impression that the unpredictable can be managed, tamed, or outperformed.
· Marketing Appeal: The novelty of complexity can be leveraged to attract clients, who may equate “advanced” with “superior.”
· Fees and Revenue: Complex products often carry higher fees, which can benefit advisers and product providers more than the end investor.
Yet, beneath the surface, complexity often introduces new risks and obscures true understanding.
The Power of Simplicity
Simple does not mean simplistic. In financial planning, simplicity refers to strategies and solutions that are transparent, understandable, and easy to implement. These are the approaches that clients can comprehend, trust, and stick with for the long haul.
Transparency and Trust
A fundamental benefit of simplicity is transparency. Straightforward portfolios—like those built largely from index funds, blue-chip stocks, or balanced mutual funds—allow clients to see exactly what they own and why. This clear line of sight builds trust. Clients are more likely to stay the course if they understand the rationale behind their investments.
Lower Costs, Higher Returns
One of the most significant drags on long-term wealth accumulation is cost. Complex solutions frequently carry higher management fees, trading costs, and tax inefficiencies. In contrast, simple portfolios—such as those built around low-cost funds or ETFs—keep costs in check. Over decades, the difference between a 1% fee and a 0.1% fee can mean hundreds of thousands of dollars for a diligent saver.
Behavioral Advantages
Human psychology is wired for action, especially in times of uncertainty. Complex strategies often encourage frequent tinkering, which can erode returns through poor timing and excess trading. Simple strategies, rooted in discipline and patience, help clients ride out volatility and avoid common behavioral pitfalls.
Tax Efficiency
Simplicity also shines when it comes to tax efficiency. The more moving parts in a portfolio, the more opportunities for taxable events—and surprises. Straightforward portfolios built for the long term tend to generate fewer taxable gains, making them more tax-efficient for most investors.
Simple Doesn’t Mean Easy
It’s important to note that simple isn’t always easy. Emotional discipline, patience, and the ability to tune out market noise are crucial. The temptation to chase the latest hot product or tweak a plan in the face of volatility is ever-present. Here is where a financial planner’s role is most powerful: not as a seller of exotic products, but as a coach and guide, helping clients stay the course.
The Financial Planner’s Simplifying Role
The best Financial Planners help clients:
· Define clear, realistic goals
· Choose straightforward investment solutions
· Educate clients about the benefits of simplicity
· Coach clients through tough times to prevent costly mistakes
When Is Complexity Justified?
There are situations where complexity is warranted: high-net-worth individuals with unique estate planning needs, businesses with specialized risks, or those with philanthropic ambitions. Even in these cases, the best financial planners strive to simplify wherever possible.
Practical Steps for Investors
If you’re an investor, consider these steps:
· Review your portfolio regularly for unnecessary complexity.
· Focus on strategies and products you fully understand.
· Be wary of products with high fees and opaque risks.
· Ask, “Does this make my financial life simpler or more complicated?”
Conclusion: The Enduring Value of Simplicity
Complexity in finance may sell, but simplicity builds wealth. Clarity, transparency, and cost control will always trump the allure of the latest financial innovation for most investors. As a financial planner, I more often than not, choose the simple path, ensuring that my clients’ financial journeys are as rewarding and stress-free as possible. In the end, the simplest solution—understood, trusted, and consistently followed—is likely to be the most successful. Simplicity is not just a strategy. It’s a philosophy that brings peace of mind and, ultimately, better results.