Digital Tools Drive Advisor Efficiency and Optimize Client Engagement

Choice Architecture: Less is More

FOR IMMEDIATE RELEASE

June 2018, BOSTON. Too much choice is detrimental to retail investors. New research from Cerulli Associates, a global research and consulting firm, finds that when faced with an overwhelming amount of options, consumers will frequently revert to suboptimal biases to help make their decision processes less taxing.

“With access to nearly unlimited data, investors can easily find themselves overwhelmed rather than informed. Retail investors have access to an astounding array of product and service platforms,” states Scott Smith, director at Cerulli. “But they struggle to find the solution within the industry landscape that is best suited to meet their individual financial wants and needs.”

“By incorporating active choice architecture, providers can leverage whatever information they have been able to divine through each interaction to more appropriately frame inquiries to a segmented client base,” continues Scott. “By doing so, providers are able to limit the number of choices offered to those most likely to be of interest, and structure the order in which they are presented to streamline investors’ product and platform decisions.”

“We believe providers can optimize their own success and the outcomes of their investors by segmenting their addressable market through an advice orientation lens, with a choice architecture overlay, to help expediently guide prospective clients to the platform and product solutions most likely to best meet their preferences,” says Smith.

Cerulli’s latest report, U.S. Retail Investor Products and Platforms 2018: Defining Client Experience Through Choice Architecture, is designed to help product manufacturers and distributors understand retail investors’ product preferences, product use, and product needs to better inform product development and distribution initiatives.

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