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Don’t Believe the Pundits—Small is Beautiful

Scott's Column

Pundits keep predicting that big will “dominate” small in the financial advice space.

I ain’t buyin’ it.

The big wirehouses have been around forever and they have been losing ground not gaining it.

Mark Hurley predicted decades ago that the independent advisory business would consolidate into a handful of big firms and, instead, there are more small firms now than there were then.

Legions of firms like First Ascent provide small firms with the capabilities to compete effectively with the big guys, thus shrinking any advantage of bigness. This trend will only accelerate.

In other professional services, like legal and accounting, big and small have coexisted for years. Big does not dominate small. In fact, there are no dominant players.

The truth is, being big is hard.

You can see many of the big firms in the wealth-tech/wealth management space buckling under their own weight. Do they look scary and intimidating or bewildered and distracted?

How do you like the service you get from your cable company, your phone company, or your health insurance company? It’s terrible.

Can a massive firm ever serve individuals exceptionally well? Not many can.

If you are building cars, running a railroad, or selling computers, scale is important. Big and scale go hand in hand. But neither big, nor scale are closely associated with quality service.

There is always tension between efficiency and creating a memorable client experience. Good and big are two very different things, and good wins in the world of personal service.

If building a large firm is one of your goals, there’s nothing wrong with that.  Just don’t do it because you expect to dominate the smaller firms in your market.

Nimble and responsive wins in the personal service business.

Fear not, small firms! Your clients love you. Say it loud: “I’m small and I’m proud!”