The Illusion of choice
I'm a bit of a fan of infographics
. Judging by the frequency with which guests pick up our copy of 'Information is Beautiful
', I'm probably not alone in this respect.
So you might therefore understand why I found this image, such an interesting one...
Interesting, is it not, that all of those hundreds of brands that we just have to have are in fact owned by a mere ten gigantic corporations? (By the way, if you are interested enough to view this infographic in its natural environment, then please click here - this will allow you to zoom into the detail, and there's a lot to see). I find it intriguing that purchasers of Body Shop products, motivated at least in part by that company's ethical and environmental track-record, might not be aware that the ultimate holding company is Nestle, the CEO of which has recently informed us that human beings don't have a 'right' to water - and which is currently depleting aquifers in Pakistan in order to sell expensive, bottled mineral water to consumers in the US and Europe. Yes, a graphic like this can tell you a great deal, very quickly. And its the kind of information that might result in people changing their purchasing habits!
So this got me thinking about the element of choice. The huge multiplicity of brand names seems to provide an illusion of choice for the consumer. There may be four or five mainstream brands of shampoo, for instance, but it is hardly rocket-science to assume that if the same corporation owns them all, then the usual 'economies of scale' are likely to result in a remarkably similar approach to chemistry, sourcing ingredients etc.
I think that, in the past, a number of the bigger networks were up to something similar - providing the illusion of choice to consumers seeking independent advice, but in reality limiting the options to those that they had control over. Usually, that control had a lot to do with the deals that were carved out with product-providers, in smoke-filled rooms. Thankfully, in the new RDR marketplace, most of those firms have now (largely) abandoned the pretence of independence - which helps define a territory where committed IFAs can do the job properly, by offering their clients genuine choice.
At the last count, ValidPath have agency relationships with 268 product and service providers. It looks as if today that number will rise to 269. The number itself is not the point - and neither do we expect our Member Firms to use all these companies. The point is, however, that they can - and that's the first pre-requisite for offering your clients genuine choices, to access investments, products, services which are entirely appropriate for them.
Our good friend and colleague, Gill Cardy, who runs IFACentre, has been highlighting this issue for years, with a logic and consistency which seems entirely lost on the big players. There is an integrity to such independent advice and, pragmatically, it helps clients make the right decisions for themselves - see this recent piece of research.
Kevin Moss, 15/11/2013
|It's all across the news, so prepare yourself for the onslaught!