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Decision Paralysis: The Rise to One Million Investment Choices

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The following content is sponsored by Morningstar
A bar chart showing the growth in managed investment products with the end point being a projection of one million. A photo of a woman scratching her head is overlaid on the chart to indicate decision paralysis.

Decision Paralysis: The Rise to One Million Investment Choices

By 2031, there could be one million managed investment products. As the number of investment choices grows, investors are suffering from decision paralysis. 

We partnered with Morningstar to show the rise in investment products over time, and how financial advisors can help.

Investment Product Growth Over Time

There were just over 30,000 managed investment products in 2002, but the choices grew rapidly in the years that followed. As of June 30, 2023, there were more than 742,000 products available.

Year Number of Managed Investment Products
2002 31,470
2003 66,225
2004 96,050
2005 133,967
2006 175,001
2007 221,417
2008 276,115
2009 299,882
2010 332,693
2011 371,224
2012 411,414
2013 450,744
2014 496,460
2015 539,013
2016 573,999
2017 615,025
2018 647,483
2019 665,622
2020 688,700
2021 713,635
2022 735,474
2023 742,715
2024P 790,018
2025P 818,789
2026P 848,608
2027P 879,512
2028P 911,542
2029P 944,739
2030P 979,144
2031P 1,014,802

Source: Morningstar, 2023 data is as of June 30. Managed products include closed end funds, collective investment trusts, exchange traded funds, global restricted funds, hedge funds, insurance product funds, models, open-end funds, separate accounts, UK LP subaccounts, VA subaccounts, and VL subaccounts.

In terms of the different product types, open-ended mutual funds are the most common. However, ETFs have seen the highest growth rate over the last two decades.

Growth rates for all managed products in total were the highest in the early 2000s, but the number of products has continued to grow in recent years. The projection of one million products by 2031 assumes the compound annual growth rate of 3.64% from 2017 to 2022 continues into the future.

Enjoying this content? Dive into more insights in the Voice of the Investor Report:

Report cover titled 5 Things Advisors Need to Know About the Evolving Investor with additional pages from the report shown. There is also a large yellow button that says Download the Report with an arrow hovering over it

Overcoming Decision Paralysis

People have access to more investment products and more advice than previous generations, but this doesn’t necessarily translate to more knowledge. Instead, this can lead to confusion and decision paralysis. In fact, 26% of people say they are uncomfortable making investment decisions, primarily due to a lack of knowledge.

Notably, investors don’t view advisors as being significantly more valuable than other information sources.

Source % Who Find Source Very/Extremely Valuable
Professional advisor 57%
Investment or trading platform/website 55%
Accountant or tax advisor 53%
Business news e.g. Wall Street Journal 50%
Financial websites e.g. Yahoo Finance 49%

Source: Morningstar’s 2023 Voice of the Investor Study. The study is based on 2,003 U.S. adults who were not currently employed as a financial advisor.

However, the perceived value of advisors increases substantially once an investor begins working with one.

Status of Advisor Relationship % Who Find Advisor Very/Extremely Valuable
Do not work with an advisor (n=1,142) 31%
Work with an advisor (n=861) 90%

To help combat decision paralysis, advisors can provide actionable insights and curate options for investors. Want to learn more about today’s investors and their unique needs?

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Download Morningstar’s Voice of the Investor report.

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