We are often surprised that many investors, wealth management firm and family offices have limited networks of fellow investors and peers. When an investor is far removed from others in the industry or does not have the necessary contacts, a number of negative effects can perpetuated. These are but a few of the drawbacks of going at it alone as an investor:
Access to new ideas and investment opportunities
The investing landscape has been changing at an ever increasing pace. In order to obtain access to niche but timely areas of various markets, such as buying U.S. real estate at bargain valuations from distressed sellers, or purchasing private equity portfolios that need to be sold in the secondary marketplace (as the initial investor requires liquidity) at a discount, the broad but deep connections that are required can only be developed with much time and effort.
Is Your Advisor's Field of Vision Too Narrow?
While it is important to be a specialist in a particular area or sector, it is almost impossible to determine whether you are providing value relative to other opportunities which may have better return versus the risks involved without a broader view and network of contacts across sectors.
Not able to see new risks - aka “the canary in a coal mine”
We can all remember the period from 2007 and 2008 where lack of information flow from the credit markets made equity investors too comfortable until it was too late. Credit markets were not only weak, but were on life support and failing from the summer of 2007 onward. Firms that had connections via investments or industry contacts in this sector had a much better sense of the immediate risks within the system.
Identify ways to benefit your business
The development of a strong community of peers and business partners allows us to assist, introduce, or connect clients with other clients or business partners with similar interests. The ability to share and provide valuable insight while building relationships with like-minded individuals, allows one to learn of new opportunities, source deals, or find support with people who have similar aspirations and challenges. While an initial introduction may not appear to have an immediate benefit, the value can be derived in ways that cannot be foreseen.
As a firm, Northland Wealth will continue to dedicate resources, time and effort to building our global network to benefit you, as we strive to have unparalleled access to the highest quality investment opportunities and networks to assist our clients in achieving their dreams, goals and objectives.