You’re Killing Me With All These Choices

All I needed was deodorant.

 

The exact type was: Dove Men+Care Extra Fresh, gray packaging with a light green square on the label. I’ve used it for years.

 

When I got to Target, I was faced with a tsunami of choice. Dove alone had dozens of deodorant options- and the differences in packaging were only slight.

 

I had to lie down in the aisle, take a nap, and then make a choice.

 

OK, I’m lying about the nap, but I’m sure you’ve experienced the same thing. We have far too many choices with everything: food, clothing, entertainment, business products, and tools. We’ve reached a point where it’s impacting out sanity, and I think I have a solution.

 

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Lots of choices isn’t a great thing

 

If you listen to the Tim Ferriss Podcast (which I highly recommend), you’ll often hear about the Paradox of Choice. Here’s the definition:

 

“The paradox of choice stipulates that while we might believe that being presented with multiple options actually makes it easier to choose one that we are happy with, and thus increases consumer satisfaction, having an abundance of options actually requires more effort to make a decision and can leave us feeling unsatisfied with our choice.”

 

More effort to make a decision, which means more time and more distraction. The quote continues:

 

“When the number of choices increases, so does the difficulty of knowing what is best. Instead of increasing our freedom to have what we want, the paradox of choice suggests that having too many choices actually limits our freedom.”

 

Many people believe that having dozens (or hundreds) of choices is a good thing. Turns out it may not be.

 

Not sure if you buy the argument? Think about investing.

 

Complexity is harming investors

 

Here’s a CNBC article from April of 2022:

 

“As more cutting-edge investment products work their way into the marketplace, there’s growing fear retail investors and even professional brokers are getting in over their heads.”

 

Note the end of the sentence- it’s important. Investing may now be too complex for professional brokers, those who do investing for a living. Complex product offerings is part of the problem:

 

“The Financial Industry Regulatory Authority, or FINRA, considers leveraged and inverse ETFs, equity indexed annuities and reverse convertibles as complex products.”

 

I was in the investment business for years, I stay informed- and I’ve never heard of an inverse EFT. I guess the joke is on me…

 

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Too many choices

 

Consider this: The more investment choices there are, the more your investment advisor must learn- and monitor- to stay informed. So how many investment choices are out there?

 

Mutual funds- they’re straightforward right? Over the past 40 years, individual investors have used mutual funds with great success. However, Statista reports that there are over 126,000 mutual funds (as of 2020).

 

What about exchange traded funds (ETFs)- another investment product used by individual investors. Statista reports over 2,200 ETFs in the US.

 

Warren Buffet, possibly the world’s most successful investor, says “Don’t invest in businesses you don’t understand.” With so many choices, it’s hard to make decisions and understand your investments.

 

Is your insurance agent or CPA soliciting your investment business? You’re not alone.

 

Too many advisors

 

In the late 90s and early 2000s I trained over 1,000 people in a crash course to become licensed as investment advisors though FINRA, the regulatory agency. I worked for a company that is now part of Kaplan, and I taught a 40-hour course once a month (one of the hardest things I’ve ever done).

 

Many of the people in my classes were CPAs and insurance agents who were moving into the investment advisory field. This trend creates confusion for investors, because professionals in other fields are now licensed as investment advisors.

 

Wait, I though Bob was an insurance agent- why is he asking about my retirement plan?

 

Too many investment choices, and too many advisors. So, what’s the answer?

 

Find one advisor and stick with them- that’s my two cents. Keep it simple, and don’t do business with multiple advisors. I’m not here to give investment advice, so find one professional for the long term.

 

Whew- I feel better.

 

I’m continually amazed at the number of companies selling a product or service in a niche- even a tiny niche.

Is everyone selling the same product?

 

Let’s start bigger: how about dog food?

 

According to an industry source: “The American Pet Product Association 2017-2018 Pet Ownership Survey found that 68% of US households own a pet and spend an average of $300 annually on pet food and treats. The US pet food market is expected to reach $30 billion in 2022.”

 

That’s a lot of Alpo– does anyone remember when Ed McMahon used to do live commercial spots on the Tonight Show for Alpo? They’d have a dog on set when he did the spots- here’s a video of a commercial.

 

Another quote from the same source: “Pet food and treat options available to US pet owners have exploded in recent years. GfK reports the number of brands has increased 71% since 2011 and now totals 630.”

 

Really? 630?

 

Given the overload of choices, why would anyone want to change the brand they buy? Interestingly, the number one reason why customers change brands: poor customer service.

 

OK, I get it. As long as the brand doesn’t drop the ball, I’ll stick with what I normally buy…. and that applies to just about everything.

The decision that eliminates 100 future decisions

 

This is a phrase that Tim Ferriss talks about frequently, and I embrace it. Here’s are some future decisions I’ve eliminated:

 

Same clothes

 

Unless it’s a special event (dinner, wedding, funeral), I wear hiking pants and rotate a small number of shirts and sweaters, depending on the weather. Warm outside? I unzip the bottom of the hiking pants and wear the shorts.

 

Same food

 

If I’m home, I eat the exact same thing for breakfast and lunch 7 days a week.

 

“Don’t you get tired of it?”, you may ask.

 

No, because I don’t need to think about what I eat for those meals. Shopping (and we get everything delivered) is easy, because my food choices don’t change. I’d rather eliminate the decision to simplify my life.

 

So who’s with me? Embrace the simple and reduce the need to deal with choices.

 

Food for thought.

 

 

Ken

 

Image: Virginia Retail, WalMart