What RIAs can learn from Malcolm Gladwell’s writings on entrepreneurs as risk averse

Malcolm Gladwell’s article in The New Yorker paints an unfair and untrue picture of entrepreneurs and their motives. To read my comments in their entirety go to http://ventureneer.com/vblog/gladwell-ignores-most-entrepreneurs-make-points-about-few

Though I don’t have a “New Yorker” subscription and haven’t read the essay, the hypothesis makes perfect sense to me though I would guess many RIAs would disagree. Almost any sales business, whether selling circuit chips at Intel or circus tickets, involves a good deal of “bravado” and optimism. This perpetuates the view that high risk and high rewards move in lockstep. Warren Buffett has made this point with several industries including airlines, automotive even the Spanish Kingdom’s funding of Christopher Columbus, none of which has earned a decent return on its capital.

I don’t know what else the article says but this part I agree with.

I meant that Buffett has made the contrary point; i.e. high risk and high rewards do not move in lockstep hence why the early US auto and airline industries have not recouped their aggregated invested capital. Hope, however, springs eternal.

why do we keep referring advisors who take a book of business and lift it out from a broker dealer who funded them as they built it up as an entreprenuer. I once was told that until you have paid a bill and met a payroll with your own money you don’t know anything about business.
I would suspect that very few of advisors that this industry refers to as entreprenuers has ever done anything like that.

Well, we didn’t say advisors are entrepreneurs per se (though some are, for sure). We made the point that, hopefully, they can learn a thing or two from the good ones.

thanks,

Brooke