Which Broker-Dealers Will Survive? Malcolm Gladwell Offers Some Answers
June 16, 2016 By Jon Henschen, as featured on ThinkAdvisor Determining the ideal elementary school class size has been a hotly debated topic for a number of years. The prevailing wisdom is that smaller is better. But is that always true? In his book “David and Goliath,” author Malcolm Gladwell uses the “Inverted U Curve Principle” to demonstrate the ideal class size. I’d argue that the U Curve provides interesting insights into the ideal size for a broker-dealer, and suggests which BDs will survive in the current market and regulatory atmosphere. But first, let’s explore Gladwell’s research. Gladwell explains that there are three parts to the inverted U curve, and each part follows a different logic. On the left side of the curve, doing more or having more makes things better. On the flat middle, doing...