Importance of Relationships
A casualty of the financial crisis is reliance on predictable models and big brand names in the financial world. Most risk modeling was way off in 2008. All asset classes – stocks, bonds, commodities, real estate were all down in the 4th quarter of 2008 despite copious financial statistics showing that many of these assets were cross correlated. Many previously prestigious and well thought of firms have lost money to the point of embarrassment. As a result, people no longer wholly rely on spreadsheets or the reputation of a firm when making important strategic decisions.
Nowadays people are turning away from big brand names to small, new names for assistance. They are using their personal extended networks – people they know such as family, friends and business associates to help find the best resources for them. They are less likely to think that only a big, well known firm can meet their needs. This is a healthy transition in the market.
Many of the large financial firms were too big. They were inwardly focused and no longer provided good customer service. In retrospect, they were not only too big to be managed effectively but also too big to compete effectively. People are back to relying on people that they know and trust to help them figure out the best path to take. Independent, small firms are a beneficiary of this trend.
