For over a decade, the consultant’s and communication specialist’s refrain has been “keep your investment menus compact; having too many investment options confuses participants”. It’s become another in a collection of reflexive sayings that are repeated without real thought. In this case, while the advice may be good, the usual reasoning is questionable. A compact investment menu is indeed, often, a good thing, but not necessarily for the reasons most advocates provide. In this article, we look at the history of the recommendation and its current utility.

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