“Simplicity is the ultimate sophistication.” —Leonardo da Vinci

Sometimes I miss simple.

Analogue clocks are simple. Every now and then the power goes out to our house. We walk into the kitchen and find flashing blue lights in the displays on the oven and the microwave. These digital timekeepers need to be reset. Meanwhile, on the wall and on the fireplace mantle, our analogue clocks are quietly, reliably, keeping time. Simply.

We own two refrigerators. They have the convenience of ice makers as well as water dispensers. When you want ice, you choose either crushed or cubed. If you select crushed be prepared to hear the sound of semi-trucks driving over gravel. If you choose cubed, the glass in your hand will catch about 80% of them. The rest will find hiding places with remarkable speed. In order to save yourself the inconvenience of opening the freezer door, you must accept either being frightened out of your socks by harsh, grinding noise, or spending a few minutes on your knees tracking down scattered ice.

I miss ice cube trays. We had aluminum trays growing up. A little lever cracked them all at once into free-standing cubes. Choose as many as you want, and then either put more water into the tray, or return it back to the freezer. Simple.

Placing Value on Simplicity in Financial Services

Satisfaction and Complexity Are Inversely Related

The beauty of Independent Financial Services rests in alternatives. Choices. The word “independence” reflects the freedom to recommend proposed solutions from among a large number of products, services, providers, or vendors.

Question: Is it possible to make decision-making more difficult than it needs to be by offering too many alternatives?

Psychologist Barry Schwartz, in his 2005 TED Talk,¹ discussed the disadvantages of having too many alternatives.

According to Schwartz, too many choices can have negative effects on people:

• Rather than being liberating, it produces paralysis. “With so many options to choose from, people find it very difficult to choose at all.”
• “The second effect is that, even if we manage to overcome the paralysis and make a choice, we end up less satisfied with the result of the choice than we would be if we had fewer options to choose from. It’s easy to imagine that you could’ve made a different choice that would’ve been better. And what happens is, this imagined alternative induces you to regret the decision you made, and this regret subtracts from the satisfaction you get out of the decision you made, even if it was a good decision. The more options there are, the easier it is to regret anything at all that is disappointing about the option that you chose.”
• Escalation of expectations. “Adding options to people’s lives can’t help but increase the expectations people have about how good those options will be. And what that’s going to produce is less satisfaction with results, even when they’re good results.”

Question: In your interactions with your customers, are you inadvertently reducing their satisfaction in your services by offering them too many options?

Working in Opposition to Human Behavior
At the heart of Independent Financial Services is the human heart. And brain. We seek to tap into human relationships and the hunger for human flourishing.

Yet, we often work in an opposite direction to how human beings operate.

According to Christopher Ingraham in an April 2021 article² in The Washington Post, human beings “tend to solve problems by adding things together rather than taking things away, even when doing so goes against our best interests.”

In our logical minds, the numerical concepts of “more” and “higher” equate to evaluative concepts of “positive” and “better.” We know, pragmatically, that “more” does not automatically equal “better” because we all have suffered from overburdened schedules, too many regulations, and being too short for our weight.

As humans faced with multiple options to solve a problem, we tend to choose the most complex solution. In psychology, this is known as the “complexity bias.” This may be explained as a means of feeding our egos. We feel like we have authority on a topic when we use complex jargon. The more complex and busy our schedules and routines, the more likely we are to feel like we’re doing life right.

The Cambridge Dictionary defines complexity as “the state of having many parts and being difficult to understand or find an answer to.” The definition of simplicity is the inverse: “something [that] is easy to understand or do.”

When people think something is harder than it is, they often surrender their responsibility to understand it. This is the eye-glazing reaction we get as soon as we discuss something like indexed universal life. To resist taking responsibility for deciding, people will procrastinate or reject things when they do not understand.

Complexity bias also describes our tendency to look at something that is easy to understand and view it as having elements that are difficult to understand.

Imagine someone who is successful, makes a significant income, owns property, and seems intelligent. This same person may not have a Will. A Will represents multiple decisions, several individual steps that are out of the ordinary, and even requires awkward conversations. None of these in themselves are hard but, together, they make it difficult to know how to get started.

Anything that has the word “insurance” in its name strikes many people as overly complex. Health Insurance. Life Insurance. Long Term Care Insurance. Disability Insurance. I have witnessed engineers, PhDs, computer scientists and other highly intelligent men and women struggle with the idea of looking at options for their insurance needs.

Edsger Wybe Dijkstra was a Dutch computer scientist, programmer, software engineer, systems scientist, science essayist, and pioneer in computing science. He said some remarkably pithy things, including:

• “Computer science is no more about computers than astronomy is about telescopes.”
• “The question of whether a computer can think is no more interesting than the question of whether a submarine can swim.”

But my favorite of his quotes is this: “Simplicity is a great virtue, but it requires hard work to achieve it and education to appreciate it. And to make matters worse: complexity sells better.”

Questions:

• In our interactions with our customers, are we creating greater than necessary complexity simply because it prevents people from taking responsibility to understand?
• Do we innately act on the impulse that complexity sells better?
• Are we resisting doing the hard work required to make things simpler?
• Do we believe our customers do not have the education required to grasp the wisdom of simple?

Making Simplicity the Objective
Confucius said, “Life is really simple, but we insist on making it complicated.”
What if all of us in Independent Financial Services took an oath to resist the temptation to make everything complicated?

Maybe you have heard of something called “Occam’s razor.” This is a principle used by scientists when looking at possible causation. It is defined as, “Among competing hypotheses, the one with the fewest assumptions should be selected.” Or, more simply, Occam’s razor states that the simplest explanation is preferable to one that is more complex.

If we want to change people’s circumstances, move them from indecisive to decisive, from uninsured to insured, from unprepared to prepared, we need to deploy simpler explanations.

Anyone who has read Atomic Habits by James Clear knows that our brains are wired to take the path of least resistance, the path that requires the least amount of energy. It is the basis of why we form habits. If a person repeats the same action on a regular basis in response to the same cue and reward, it will become a habit as the corresponding neural pathway is formed. From then on, their brain will use less energy to complete the same action.

Habit-forming behavior follows the principle of Occam’s razor.

Personal Experiences:
As an Independent Financial Professional I have done the right things poorly, the wrong things well, and the so-so things in a mediocre fashion. On occasion, I did the right thing well. Examples:

• I sold 20-year level term to someone paralyzed by indecision between universal life and whole life. The widow was pleased to receive the death proceeds.
• I urged people to save, then invest. That served a young couple who had received a large inheritance only months before Black Monday (October 19, 1987) when America experienced a sudden, severe, and largely unexpected stock market crash. They were anxious to invest but had little in savings. I urged patience and caution. They were grateful.
• When two business partners were delaying the funding of their buy-sell agreement because another agent promoted an expensive permanent policy, I urged them to buy term now, just in case. Just in time, it turned out.
• When coaching a brokerage general agency how to sell more life insurance, they wanted me to devise multiple marketing plans to get their property and casualty agents to sell life insurance. Instead, I directed them away from their P&C agents and helped them find just 10 life insurance agents. They tripled their sales.

Action Steps:
Consider forming these habits to make your work simpler for you and easier for your customers:

1. Rather than proposing a complex investment strategy that has two dozen mutual funds for example, which will only make it hard for a client to understand what is going on in the account, form instead the habit of recommending an investment strategy with fewer holdings. A simpler approach is capable of accomplishing the same objectives as the more complicated portfolio, but in a much more efficient, low-cost way. The simpler strategy may not seem as exciting or exotic, but it will likely reach the same goals at a lower cost.
2. Quit explaining how something works, and focus on why the product or approach fits the needs. Replace the perceived need to make technicians of everyone and choose to empower everyone with the information that will drive action.
3. Form the habit of proposing simpler solutions. Present shorter proposals. Create written plans on one page. Simple plans and solutions are easier to understand, implement, and maintain. The goal should always be to give the customer the ability to act. A simple plan can include the vital information, strategies, and decisions, and possibly place your customer on the path of, and in the direction of, actionable simplicity.
4. Create a strategy of introducing greater complexity only in parallel to the demand for it in your customers’ lives. People actually have less of a need to know than they do a push to act.

Conclusion
Due to the human tendency toward complexity bias, we need to rethink how we propose solutions, and consider reducing the variety, number, and complexity of alternatives.
We are at our best when our customers are surprised by the experience of surpassed expectations.

We can be tempted to present solutions riddled with complexity and simultaneously prohibit our customers from both understanding and acting. Or we can follow the reasoning of Occam’s razor and present simpler solutions.

As an industry we are infatuated with complexity. Maybe back in the day things were simpler, but also, perhaps, worse in some ways.

Psychologist Barry Schwartz: “The reason that everything was better back when everything was worse is that when everything was worse, it was actually possible for people to have experiences that were a pleasant surprise.”³

Is it time to begin giving your customers a pleasant surprise?

Footnotes:

1. https://www.ted.com/talks.barry_schwartz_the_paradox_of_choice.
2. https://www.washingtonpost.com.business/2021/04/16/bias-problem-solving-nature.
3. https://www.ted.com/talks/barry_schwartz_the_paradox_of_choice.