When good enough is best

Liz Pfeuti suggests that the pursuit of the “best” in consumer choices and finance often overshadows the importance of practical needs and outcomes.

One of my favourite genres of TV show involves people claiming to be able to pick out their favourite very expensive brand of food/cologne/washing powder in a blind test.

Typically, the subject is unshakable in their belief that their taste/smell/any other sensory reaction is highly attuned to the consuming or using of a product, only for them to be utterly amazed when the packaging reveals a budget brand that would save them thousands of pounds a year if they switched.

It makes for great telly, and there seems to be no shortage of people lining up to be (almost certainly) shown to be paying well over the odds for stuff – just because they think paying more means they are getting the best.

From £200 skin cream to £10 bars of chocolate, a broad swathe of the population has fallen hook, line and sinker for the marketing assertion that the higher the cost, the better something is.

And, crucially, as a discerning consumer, you are flattered to believe you both appreciate and deserve the best.

However, do you actually need the best? Let’s leave aside the question of whether you deserve it or not.

Does a Tuesday night tea really warrant foie gras on a freshly baked baguette helicoptered in from Paris? Do Sunday league football teams need the highest-spec kit for a weekly mudbath against local rivals?

Before the cost-of-living crisis, it was questionable whether paying for what we are sold as the best made good personal and economic sense. Today, the matter is far more pressing.

But it’s not just teenagers claiming to be able to pick Chanel No. 5 out of a lineup or middle-aged quaffers determined to identify a chateau-bottled burgundy over a blend of grapes from the EEA who fall into this category of consumers.

Within fund management and finance more generally, there is a thirst for the superlative – and that comes with a price tag.

“Best ideas” funds, the largest research team, the fastest systems, the highest number of industry accolades, the list goes on and often means a basis point or five is added to the price to the end investor.

This anchoring to the superlative gives the consumer or buyer of services some comfort that they are getting most <<insert adjective>> their money can buy, even if that money is probably more than they would like.

Yet, despite their claims, it is not physically possible for every provider to excel all the time. The law of averages exists and is proven. The cost of the so-called “best” may also offset the financial benefit it might claim to achieve.

But, more importantly, the best isn’t actually what we need anyway – at least not for everyday needs.

We need good, competent, even excellent, upon occasion, but very, very rarely do we need the best of anything in a certain category – and we certainly don’t need to pay through the nose for it on a regular or habitual basis.

Just as a good tin of tomatoes can help us achieve our objective of a tasty spag bol, and a regular pair of (ethically produced) football boots will help a talented player send their team through to the regional semi-finals, what we buy should be led by our needs and objectives, rather than just being told to pay for its supposed quality.

Don’t forget, Pele learned to play football barefoot.

A specific and targeted outcome should be the key driver of decision-making in financial services – especially as what “best” means to one person or organisation may be vastly different to another – which may mean taking something standard, off the shelf and run of the mill.

Yes, we all want the best for our organisations, but “best”, in this case, might mean the objective-led delivery of an outcome.

© 2023 funds europe

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