It has been said more than once that there are parallels between dieting and investing. That is winning strategies are “simple, but not easy.” For a long time I used to think that. My book was in large part an argument that do-it-yourself investors could effectively manage their portfolios by following simple guidelines. I no longer feel that is the case.

A quick peek at the world of nutrition science should give us some pause. Aaron E. Carroll writing in the New York Times reviews some recent nutrition research, that after additional scrutiny, didn’t hold up under scrutiny. He writes:

We want to believe there are easy fixes to the obesity epidemic and nutrition in general. We want to believe there are simple actions we can take, like putting labels on menus, or stickers on food, or jazzing up the names of vegetables. Sadly, all of that may not work, regardless of what advocates say. When nutrition solutions sound too good to be true, there’s a good chance they are.

Diet, like investing, involves a complex web of human behaviors. To think that we can simply wave our hands and come up with better behavior is at best naive. Dan Egan at Betterment has a great post up documenting some ways in which the robo-advisor is testing methods to help nudge investors towards better behaviors. As Egan notes good intentions should not be the measure of an advisor’s actions. Egan writes:

We believe that the standard of good advice should include a measure of efficacy: that the advice did actually affect and improve the individual’s outcome. Ideally, such measures would show improvement relative to either not receiving advice, or compared to advice already received. Ultimately, it might turn out that the most effective “advice” is to simply do it for the individual, as we’ve seen with programs like Save More Tomorrow. And sometimes making better behavior the default (while allowing people to opt-out) is the best option.

There are no easy fixes to our greatest investment problem: behavior. The way forward can’t simply be to tell investors to ‘sin, not.’ Investment solutions need to be more rigorous, testable and ultimately sustainable for the vast majority of investors. Otherwise are we making the same mistakes believing in nutrition solutions that ‘sound too good to be true.’

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