A new study coming out from the Journal of Consumer Research makes the case that rude salespeople are better at moving luxury goods.
Which makes a twisted kind of sense. After all, if you have to ask the price, you probably can’t afford it, right? People are aspirational by nature. We want bigger and better, and accepting less than the best experience or product can feel like a mistake.
A leather purse is a leather purse. But a leather purse with a logo stamped on it is a luxury good. Apparently, getting looked down upon by an hourly sales clerk while attempting purchase the luxury good is all the more effective. It puts us in our place, makes us that much more aspirational.
That purse or sports car or perfume has its purpose and it will eventually become old or used up. We might enjoy the experience of owning it, but the utility of the thing isn’t going to be different from a cheaper product. Purses carry items. Cars move people from point to point.
Very similar psychology is at work in the world of retirement. Most of the big brokerage brands work really hard to seem open and caring. They spend a lot of money on the colors of their websites, the feel of the paper used on their brochures. The people who answer the phones in the call centers are carefully trained.
Luxury finance branding is far, far different. Private bank. Closed to new investors. By appointment only.
In part, this is an effort to segment the market. The high-end money managers don’t have the time to pay attention to thousands of clients. They can’t even service hundreds very well. So they make sure you show up with at least a half-million under cover, and some aim for $3 million or more.
The trouble with all this aspirational marketing is that nothing in the research suggests that paying more for money management means you get a better product. If you pay a financial advisor to manage your estate planning, yes, that can be worthwhile. It’s a complicated topic. Tax management is difficult, too.
But if you spend your money on a financial advisor on the presumption that he or she can help you beat the stock market, well, now you’re really wasting money.
Morningstar, the research firm, took at look at its data over years to try to figure out what winning funds had in common. As it turned out, high performance wasn’t about manager tenure, or market cycles, or asset classes or anything related to which stocks they bought or sold.
The determining factor was cost. Lower fees meant higher returns.
Think about that next you find yourself wandering the cosmetics aisle in a fancy mall shop. All that effort to imply expertise, science and quality. Maybe for a perfume there is a difference, but not when it comes to money management.