The Dangerous Allure of Simple Solutions
In our advisory offices, there's a phrase we hear with some frequency. It begins innocently enough, delivered sometimes with mild exasperation at the perceived complexity of financial planning.
"Why wouldn't I just put everything in index funds?"
"Why wouldn't I just pay off my mortgage early?"
"Why wouldn't I just wait to take Social Security at 70?"
This seemingly straightforward question - "Why wouldn't I just...?" - carries within it two powerful assumptions.
- First, that the proposed action is simple to execute.
- Second, that the outcome is obviously superior to all alternatives. The question assumes that it suggests its own answer: there is no good reason not to "just" do this thing.
But these questions deserve more than rhetorical treatment. They deserve serious consideration, because financial decisions rarely come with the clarity and certainty that "just" implies.
The Hidden Complexity in Simplicity
What makes the "Why wouldn't I just...?" question so seductive is its simplicity. It reduces complex financial decisions to straightforward actions with predictable outcomes. It feels empowering, as though it's a straightforward way to skip hard thinking and arrive at clarity.
But simplicity often conceals blind spots.
When someone asks, "Why wouldn't I just invest my entire portfolio in high-dividend stocks?", maybe they're assuming a reliable income stream without properly accounting for sector concentration risk, tax inefficiency, the possibility that dividend distributions may cannibalize underlying corporate income/profits/gains, or how these stocks might perform during economic downturns precisely when that income is most needed.
The "just" in the question dismisses the uncertainty inherent in financial markets and life itself. It assumes deterministic outcomes in a probabilistic world.
When Expected Becomes Assumed
Perhaps the most dangerous aspect of "Why wouldn't I just...?" thinking is how it transforms expected outcomes into assumed certainties.
"Why wouldn't I just wait to claim Social Security at 70 for the maximum benefit?"
This strategy might maximize monthly payments - if the recipient lives long enough to collect them. But what if health concerns arise? What if you need the income earlier? What if tax laws change? What if the program itself is modified before you reach 70?
The person who asks this question often might be seeing only the mathematical optimum based on average life expectancy, not the range of possible outcomes or how their personal circumstances might diverge from statistical averages. They might also just be repeating something they've heard before and are now accepting as indisputable fact.
Perhaps the most common - and pernicious - version of the question might be the form that assumes historical investment returns will replicate over every future period. "Why wouldn't I just invest $100,000 in _____ at 9% and have $167,000 when I need it in 6 years instead?" Well, let's answer those questions. What would stand in the way of you "just" doing that? What if it doesn't go that way? What will your backup plan be, if it doesn't? What causes positive returns, and what starting factors tend to cause them to disappoint? Does the history of 6-year rolling return periods of that investment even suggest that you should expect that? If it did, what force, law of nature, or contractual provision is promising you that result in the future?
The Toolbox Approach
In our practice, we've found it helpful to think of financial strategies as tools in a toolbox. Each has its purpose, its strengths, and its limitations.
A hammer is excellent for driving nails but terrible for tightening screws. A screwdriver excels at its intended purpose but can't cut wood. No craftsperson would limit themselves to a single tool, nor would they use the wrong tool simply because it's familiar.
Similarly, financial instruments and strategies each have their optimal uses:
- Tax-advantaged accounts shine for retirement savings but can restrict access
- High-yield bonds offer income but introduce credit risk
- Growth stocks offer potential appreciation but typically greater volatility
- Insurance provides protection against catastrophic loss but comes with premium costs
The master craftsperson, like the skilled financial advisor, knows not just how to use each tool individually, but how to combine them to create something greater than the sum of its parts.
Complementary Strengths
The real magic happens when we combine financial tools in ways that allow the strengths of one to offset the weaknesses of another.
Consider the client who asks, "Why wouldn't I just invest everything in stocks for maximum growth?" This approach might offer strong potential returns, but it introduces significant volatility and sequence-of-returns risk, especially near retirement. It might introduce market risk where it is not needed, and without knowing the goal of the funds, it's hard to determine if the strengths of that asset class align with the specific person and situation in question.
Rather than dismissing this approach entirely, we might complement it with strategies that address these specific weaknesses, perhaps a cash buffer for near- and medium-term expenses, an array of conservative allocations to reduce volatility and prepare for potential "down" market periods, or guaranteed income sources to cover essential spending needs.
In this way, we might take advantage of the growth potential of stocks while mitigating their primary weaknesses.
Answering the Question
When a client poses a "Why wouldn't I just...?" question, the most valuable service we can provide is to actually answer it. Not dismissively, but thoroughly.
"You could just do that, and here's what would likely happen. But here's also what might happen instead, and here's what you'd give up by taking that approach alone."
By exploring both the strengths and limitations of any given proposed strategy, we can guide them toward a more complete solution that preserves the aspects they find appealing while addressing the gaps they hadn't considered.
The Complete Financial Picture
Financial decision making isn't about finding the one perfect strategy. It's about building a complete approach that addresses all aspects of a client's financial life - their goals, concerns, resources, constraints, and personal values.
The next time you find yourself thinking, "Why wouldn't I just...?", pause and consider:
- What risks am I not seeing?
- What alternatives am I dismissing?
- What would happen if my assumptions prove incorrect?
- How does this fit with my other financial goals and strategies?
The answer to "Why wouldn't I just...?" is rarely that the strategy is right or wrong. More often, it's simply incomplete. And in financial strategy, as in life, completeness matters.
Because the most powerful question isn't "Why wouldn't I just...?" but rather "How can I build a strategy that works across all possible futures, and not just the one I expect?"
2025-8126090.1 Exp 06/2027