That's the whole test. Complexity in a portfolio is rarely accidental — someone was paid to add each layer — and it costs you three ways at once: in fees, in the decisions you can't make because you don't understand the holding, and in the person who has to sort it all out when you can't.
A simple test with an uncomfortable answer for most portfolios.
For each thing you own, try explaining in two sentences what it holds, how it makes money, and what would make it fall. If you can't, that's worth noticing — not because you've done anything wrong, but because you can't properly judge a holding you don't understand. You can't decide whether to keep it, when to sell it, or what it's protecting you from.
Complexity in a portfolio is rarely accidental. Someone was generally paid to add each layer, and the layers cost you three ways at once: in fees, in decisions you can't make, and in the person who has to untangle it all when you can't.
Colin has $850,000 across 24 holdings and six providers, accumulated over forty years — a workplace scheme here, an adviser's recommendation there, some shares from an old employer.
When he adds up his total costs, they come to 1.6% a year. He's never seen that as a dollar figure before: it's $13,600 a year. A simpler equivalent would cost about $3,000.
The $10,600 difference doesn't sound dramatic expressed as 1.25%. Compounded over 25 years it comes to more than $1,000,000 — around a quarter of everything he'd otherwise finish with.
The bigger issue emerges when he tries the two-sentence test on his wife. She couldn't manage any of it. That's the risk that actually materialises — portfolios rarely fail because they were too aggressive; they fail because the person who understood them stopped being able to.
Higher is simpler. The components are weighted so that understanding carries the most points, followed by cost and the number of holdings. Rows highlighted in the table are the ones dragging your score down most.
Three holdings that all own the same global shares aren't diversification — they're one holding with extra paperwork. Beyond roughly fifteen positions you're generally adding admin rather than reducing risk.
Complexity isn't automatically bad. Some people genuinely need a trust, an insurance wrapper, or an illiquid holding, for reasons no calculator can know about. The point of the score isn't to argue that simple is always better — it's to make sure every layer is there for a reason you can state out loud.
And if you do decide to simplify, please don't sell everything on a Tuesday afternoon. Untangling can trigger tax, exit penalties, and the loss of features you're actually paying for. Work out the destination first, then move toward it over a year or two, using new contributions and normal rebalancing where you can.
General information only — not financial advice. Complexity is not automatically bad: some people genuinely need trusts, insurance wrappers or illiquid holdings for reasons this calculator knows nothing about. The point of the score is to make you check that every layer is there for a reason you can state — not to argue that simple is always better. Fee comparisons assume the same gross return from both options, which favours neither.