Is small the new big?

It was in 1973 that E. F. Schumacher published his groundbreaking book on economics, "Small is beautiful".  It's the kind of book that has always had its admirers, but has been largely ignored by big business.  Perhaps that is not entirely a surprise.  Interestingly, you can still pick it up for pennies on Amazon, and it still gets very positive reviews.  It is the subtitle that I particularly like: "A study of economics as if people mattered".  It is fascinating how unimportant ordinary people have become in the brave new world of financial services.  Norwich Union might spend millions on rebranding to 'Aviva' (what does that word add to the sum total of human knowledge?) but does this actually do anything for their customer service?

This has led me to wonder again about the value of the small, local firm.  Many regional IFA businesses may feel vulnerable in the present financial climate, but perhaps it is time to be less coy, less defensive about our business propositions.  After all, it is the big banks which have screwed up our financial system.  It's the big, national IFAs which have negotiated the greedy commission terms with product-providers which all the rest of us are effectively paying for.  It's the big consolidators which are buying up smaller IFA practices, raising the targets and leveraging front-end commissions whilst they are still around.  It's the big players which clearly feel they have carte-blanche to play the compliance game, and still deliver monumentally poor outcomes to their clients.  It's the big players which sell, sell, sell whilst we are left to pick up the pieces.

No, I think that small is actually the new big.  Think about it for a moment.

• smaller local firms have the flexibility to develop and target services aimed at their own local community
• it's unlikely that the majority of smaller practitioners will have such delusions of grandeur as to lead them into the monumentally crass decisions adopted by the high-street banks
• local IFA firms recognise that they need their clients, as success can be transitory without goodwill and a solid reputation
• the big institutions communicate with their 'consumers' through the impersonal, distancing device of 'call-centres' - but local practioners are accessible, direct, almost intimate in their mode of communication
• arguably, a smaller local firm ought to be able to manage change more rapidly, more effectively, than is possible given the monolithic structures created over years by the big institutions
• smaller practitioners should almost inevitably have more integrity than the big players.  The latter make big, florid mission statements, but they still market over-complex, deceptive products to people who are ill-equipped to deal with them.

In the present market, if we have the initiative to leverage these qualities, then smaller firms actually have a big advantage over the national competition.