Morningstar Advisor - August/September 2011 - 8

Behavior Gap
Simplicity and Design Matter
By Carl Richards
Our industry is one in which decided complexity
represents a sort of intellectual superiority.
For years, the classic sales strategy relied on
using confusing jargon and complex charts to
convince prospects that they need us. But if
you look around, people like the things that are
easy to understand and use. In other industries,
the pursuit of this elegant simplicity is called
design. Among the most admired companies,
it's not an afterthought, but a primary focus.
Apple AAPL is an obvious example. Before
the iPod, nothing existed to tell you how much
you'd like using a simple scroll wheel to play
music. It took a designer to decide that, and
soon after, few of us could imagine living without
it. We can learn a lot from Apple's pursuit
of simplicity and its value to our industry.
When our clients-to-be come to see us, they
rarely know what they want and almost
never know what they truly need. They may
have a sense they need help, but they often
don't even know what questions to ask. Of
course, we don't help matters when we immediately
dive into a 60-minute presentation full
of bullet points and jargon. We end up confusing
the very people we're trying to help!
Because our industry has traditionally been so
bad at design, it presents a huge opportunity
for members of the Secret Society of Real
Financial Planners (see " Questions for the
Secret Society " in the June/July issue) to stand
out from their peers by embracing simplicity
over complexity. We can do that by making the
" look and feel " of everything we do a primary
focus, instead of an afterthought. So, here are
a few simple ideas to get you started:
8 Morningstar Advisor August/September 2011
1 Explain to your parents what you do and ask
how they'd describe it to their friends.
2 Explain diversification to an 8-year-old and
then ask the child to draw it. I've experimented
with this idea, and believe me, we can't
make things too simple in our industry. People
don't find it offensive; they find it refreshing.
3 Revisit your presentations. Do you
really need 120 slides, or will 10 pictures
work instead?
4 Reduce your proposals to a single-page
summary. Some people want more detail, but
I've been surprised at the sense of relief
I see when I reduce my proposals to the most
important things.
The idea of embracing simplicity can be scary
because it's clearly different from the way
we have been doing things, but the market
does reward it. Apple, Google GOOG, UPS UPS,
and Volkswagen VLKAY are all examples. In
our industry, Morningstar has stood out as one
of the few companies that is focused on design.
So, whether we're talking about an iPod or
explaining how we can help people get what
they really need, design matters. If we're
telling people that we're trying to simplify their
lives yet everything they see from us is complex,
we're sending the wrong message. K
Carl Richards runs BehaviorGap.com, a laboratory of
sorts where he asks tough questions about financial
planning and investor behavior. He puts his ideas to
work in the real world through his firm, Prasada
Capital Management.
http://www.BehaviorGap.com
Morningstar Advisor - August/September 2011

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