Quicksand, Simplicity and why I’m stuck in the middle of Four Steve’s

It started when Kelly, who works in my office and is currently studying for her initial financial planning exams, asked me a question…

“Chris, I’m stuck on something. Can I ask you a question?”

“Sure….what do you need to know”

“I’ve read this bit on MIFID four times and I still don’t understand it. Can you help me understand?”

I stopped dead. Panic has hit. It then started to spread….

I couldn’t remember what MIFID was!

“I’m not sure Kel” I said “Let me read the segment and I’ll explain.”

I did this and panic really started to spread….

I still didn’t understand it!

Now, for anyone knows me, you’ll know that whilst I have got (hopefully) a decent number of skills and talents I’m no Stephen Hawking!

I’m comfortable with this for 2 reasons…

Number one…

I am moderately but not massively intelligent.

If you want to put this it into some perspective I reckon when it comes to cleverness I’m nowhere near Hawking but at a guess probably somewhere between Steven Seagal and Stephen Fry! (That’s a pretty broad church. I’ll let you be the judge where I sit!)

and Number two..

I think being really really smart.

‘Hawking’ smart.

Smart which is admired but not always understood…

…should be respected but continuously challenged.

I believe that the reason complexity reigns in our profession is that many of us (and I include me in this definition) have relied on people smarter than us.

We’re sometimes told that all this complexity is for the greater good.

However a lot of the history in our industry, profession or business tells us that the more complicated we make products, business models and regulation it generally speaking leads to negative outcomes.

It leads to most people (and the people who need the most help) deciding this ‘money stuff’ is too tough and not taking meaningful action.

It leads to business models (set up by really ‘clever people’) which look relatively impressive due to their perceived size and scale but are on many occasions built on quicksand.

It leads to advisers and planners making recommendations which rely on other really ‘clever people’ to manage their clients hard earned money and can lead to, at best, another layer of unnecessary charges for the client and at worst money being invested in schemes which lose client money hand over fist.

But here’s the kicker…

Many of these people are seem smarter are no cleverer than you or I.

However they do seem to be really good at making things complicated…

…Then persuading you and I they’re needed due to being able to understood a concept they made really complicated in the first place!

When I see a complex explanation of anything my instinct is to simplify.

To break it down into components I understand.

To challenge and understand the components I don’t.


Then explain the concept in it’s simplistic component parts.

I don’t always do a great job in doing this but it’s always the aim!

However the entire financial services profession seems to be stuck in the quicksand of complexity.

This may be, in part, due to legacy.

This may be political.

This may be due to the fact that without it being overly complex it wouldn’t need as many ‘experts’ (and therefore many involved in our profession prefer the status quo instead of potential career and business damaging simplicity).

The process of simplification is never easy…

When Doctor Steve Peters (a personal hero of mine, a renowned psychologist and the fourth ‘Steve’ I’ve mentioned in this entry) simplified the process of “How our brain works” into the computer, the chimp and the human he apparently received a fair bit of stick from his professional community.

They said it was too simplistic, it should be left to academics, it didn’t explain the subtle intricacies into how the brain really works.

However by using this technique he’s helped various sportsman across various disciplines achieve success.

He helped Victoria Pendelton and Chris Hoy achieve Olympic greatness.

He wrote a bestselling book which helped normal people (including me) change the way we think for the better and just do a tiny bit more with our lives.

So, back to the story…

Once I’d got my head around what MIFID was and explained it to Kelly (Using a map of Europe, a golf umbrella and a world war II poster)….

She told me she was still confused!

So, maybe my desire for simplicity is misguided. Maybe things do need to be complex…

…or maybe (and just maybe) I’m right. If we made the laws which govern our business and profession easier, the products we recommend simpler and the way we communicate more straightforward everyone would be way better off.

What do you think?


11 thoughts on “Quicksand, Simplicity and why I’m stuck in the middle of Four Steve’s

  • Great post Chris, if we can choose simple solutions and provide simple explanations to clients we will all lead better lives.

    • Thanks Steve,

      I absolutely agree….

      However part of the problem is the fact that everyone involved, including the regulators, manufacturers, and advisers (and the organisations they’re involved with) need to broadly agree that simple is better.

      I’m not sure that’s the case. However I am a bit of an idealist and would like to think that there could be a but more of a general consensus one day…..

  • Excellent. As someone who is probably a lot lower down the Seagal/Fry/Hawking scale than you, I agree with every word and strive for simplicity at every turn. Appreciate though that retail financial services is incapable of keeping it simple. There is too much of a vested commercial interest in complexity. Take the ridiculous notion of ‘super clean’ funds as a recent example.

    • Thanks Martin,

      I agree that part of the problem is a vested commercial interest in complexity.

      I also think that many well meaning people think complex is better due to the assumption that covering all eventualities is positive when often it confuses and unnecessarily complicates!

      As for the Seagal/Fry/Hawking scale…..I’m sure you’re far higher on that me! I’m almost sitting next to Seagal on the scale!

      Thanks again for your comment.

  • I think we have almost been paraphrasing each other – I just wrote a post on Lifetalk – the thread was originally about the FCA Annuity Review but went off at a tangent.

    Here’s what I said

    “Over the years, in our culture, we have consistently opted for choice and flexibility over simplicity. We are now beginning to see the impact of this, and it is particularly clear in retirement planning.


    What we, as a society, have done, is to place ourselves in a position where advice is essential – making the wrong financial decision could have enormous consequences, and, for most people, the decisions are beyond them.”

    The problem we have is that the complexity we have chosen cant be undone. Nice to know that there is some other idiot who agrees with me 😉

    • Thanks Phil,

      I hadn’t read your Lifetalk post but I’m glad we broadly agree!

      So yes….there is some other idiot who agrees with you….me! 😉

      I also agree that for many advice is needed to help them take a financial misstep.

      However whilst we can’t do anything about certain elements of complexity (it would be too much to undo) we can focus on greater simplification in the future and we see this happening on a law by law piece at the moment (I’m thinking flat rate state pensions)

      However this is where it gets muddy.

      Anything you do needs to be based on laws and whilst simple is best for consumer you’ve potentially got the issue of a bunch of vested interest parties wanting to complicate and confuse the debate for their own interests

      I’m sure there are well meaning people too who believe that complex is best….I’m not one of them! 🙂

      Thanks for your comment again Phil!

  • *smiles*

    So I’m not the only one; thanks for your honesty.

    I first read about MIFID back in my village in Australia in 2009. I thought, ‘is it going to be all this complicated working in the UK’?

    It hasn’t been all that bad in the end, and I just decided to remember it was about a broad harmony across the EU. Oh, and hope I was never asked a question about it.

    There is so much simplification to go on though, as I just can’t understand who and why so much complexity needs to exist. (ie GAD tables; hardly consumer friendly).

    Maybe AE will help drive the change, when more people will be screaming for simpler options. I think the advice will lead the way if I’m betting on it.

    … though only if allowed under MIFID of course.

    • You’re welcome Dan,

      At least you’ve got a reason behind not understanding MIFID initially….I shouldn’t have that excuse!

      However now I understand it (for a week!) it’s not that tough.

      However my issue is that although we could probably explain MIFID in one paragraph the study book took a lot longer and in language incomprehensible to most!

      So why are we putting layers of unnecessary confusion in the way at every turn?

      You make an interesting point about AE and I believe it has the opportunity to make things far easier for most people, engage more people in the savings process and build trust in saving money once again (not bad for a little nudge!)

      However due to the fact that you’re one of our ‘colonial cousins’ you’re probably better at answering that than most…

      So, did Australian pension quasi compulsion help simplify and engage people to save?

      • Oh yes Chris, it’s the key I think.

        I’ll post a bigger response on a new thread.

  • As usual, you cut to the chase and make a good point, Chris.

    I guess there will always be complexity in financial services as it’s fundamentally challenging to create an easily accessible system for people to invest their money and make a return without themselves having the expertise to do so. We package things and advise on them to make that possible. I think our role is to make the complex simple.

    I’m not saying we achieve that, but I think it should be our goal.


    • Hi Jamie,

      Thanks for your comment.

      I agree that we need to aim to make the complex simple.

      However from where I sit I’m not convinced that’s always the ultimate aim for everyone involved in our line of business.

      If everyone was aiming for the ‘goal of simplicity’ without other drivers our business and the legislation which governs it would be more simple.


      As you know being I’m a bit of a ‘nudge fan’ so if you make the choices people make to complicated you find disenfranchised consumers which isn’t good for anyone!

      Thanks for your comment Jamie.


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