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Monday, 28 April 2008

When choice is no choice at all

Jo Parker

OK time to talk about something else other than the credit crunch.

Something that is a constant theme for our sector and that is the wrestle the industry has between offering simple products on one hand vs products that offer wide choice and flexibility.

The basic rule seems to be that the wealthier the audience you are targeting, and especially if you are distributing products via IFAs, the more choice and flexibility you should offer, so a you can tailor a solution to the consumer’s needs.

It makes a lot of sense on the face of it.

But given that there are more funds in the UK than quoted companies and a recent product spec I read had a mind boggling 23 choices/options, I wonder if this is just a bit lazy? That companies are trying to be all things to all people?

Put yourself in the shoes of the adviser or end client and this amount of choice can be very off-putting.

Reading Goldstein, Martin and Galdini’s book ‘Yes!’ they make this point well, citing the example of Procter & Gamble who offer a huge range of products. When P&G reduced the number of versions of Head and Shoulders from 26 to ‘only’ 15 they saw a 10% increase in sales.

So (and back of course) to the current market context, when we all want to be very clear about what we are purchasing and how our money is invested, reducing choices and simplifying products and ranges (as some asset managers are already doing this week), maybe a very wise course of action.

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