A Step Backward Might Be a Good Thing

Let me begin with some thoughts on the consolidation of the financial services business that continues to reduce the number of independent money management firms. The rationale is always something like: • It will give us the scale required to compete. • Or it is required as the world goes global. • Or we need additional distribution. • Product diversification. • It enables us to keep our professional staff together while providing liquidity for senior people. Nobody says (or even whispers), “It’s all about money.” Wouldn’t it be fun if someone in the future, when asked about selling out, said, “We couldn’t resist the price”! I certainly don’t make these comments out of envy but, rather, because I think it’s important to focus on some of the secondary and tertiary effects of the process. • Money will be managed by people whose passions are more about the business than the investment management process. • The business will have increasing short-term pressures. It will be difficult for this not to impact the investment time horizon of organizations. • People will complain that our business just isn’t as much fun as it used to be.