An operation does not begin at the bank. It begins long before.

Before the credit analysis there are documents, context, relationships, a thesis, and preparation. It is in that invisible part that many operations have already been won or lost.

For some years I imagined the decisive moment of a credit operation was the one in which it reached the financial institution. It made sense. That is where the money is, the analyst, the committee, and ultimately the decision able to turn a business need into available capital. After a few years working directly as a loan broker, I am beginning to think that image gives the bank too much importance and the process too little.

When an operation reaches the creditor's desk, an enormous number of decisions have already been made, including by omission. The amount requested has been defined, correctly or not. The businessman has already chosen which information to show first. The documents may be organized or scattered across three offices. The collateral may have been understood or merely appraised by the owner with the natural optimism of whoever owns the asset. The operation may have been sent to the institution that best matches the risk or simply to the first manager who answered the phone.

The committee receives the result of that process and calls it a credit proposal.

It may be more correct to say it receives the corpse, or the adult form, of a sequence of small earlier decisions.

Some operations enter the bank in good condition because they were well prepared. Others arrive almost condemned, though the borrower still imagines he is only starting.

That difference seems more and more important to me.

I have seen reasonable companies receive bad answers because nobody managed to turn their economic reality into a legible operation. I also see situations in which a businessman blames the bank for a refusal when he actually presented a request no serious creditor could have analyzed properly. Documents are missing, the numbers diverge, the purpose of the funds changes as the conversation goes on, and nobody can say precisely where the payment will come from.

The company may still be good.

The operation is bad.

It is a distinction the businessman naturally resists making because he knows his own business from inside. To him, the capacity to pay looks evident. He has worked for twenty years, knows the clients, owns properties, moves millions, and knows the company has value. When the bank asks again for a document or questions an inconsistency, he tends to see bureaucracy.

Sometimes it is bureaucracy.

Banks can produce bureaucracy with almost industrial competence.

But not every unpleasant question is useless.

The creditor does not live inside the company. He does not know what the founder knows intuitively. He has to reconstruct a reality out of evidence that can survive the enthusiasm of whoever is asking for money.

That is the first point where the originator's work can create value.

Not convincing the bank.

Making the borrower comprehensible.

There is an enormous difference.

Convincing presupposes I have a story and have to make someone believe it. Making comprehensible means turning the client's economic reality into something another person can examine, including reaching a conclusion different from mine.

Perhaps good origination begins precisely when the originator does not have to hide anything for the operation to look good.

If a relevant piece of information would destroy the credit, the problem is not in the information.

It is in the credit.

That principle looks obvious, but payment on closing works against it. The broker is paid when the operation happens. The businessman wants the money. The institution's commercial side may also want production. Everyone has some incentive to make the deal advance.

That is why the structure of the process matters.

A good machine has to produce friction in the right place.

Over the last few years I began to see that my work does not sit simply between the borrower and the source of capital. There is an earlier, almost administrative layer that determines the quality of what will be taken to market. I have to know the client, understand his estate, discover his existing debts, identify collateral, verify documents, organize financial information, and only then decide what kind of capital makes sense to look for.

That consumes a surprising amount of time.

It is not the glamorous part of the financial market.

In fact, it may be exactly the kind of work the photographs of the financial market try to hide.

A R$ 20 million loan can begin with someone chasing an accountant for the correct version of a balance sheet. A sophisticated operation with real estate collateral can sit still because a title record is not up to date. A company able to produce millions in cash can lose weeks because nobody has a definitive list of all its bank debts and their maturities.

There is some poetic justice in that.

Big money still depends on small tasks done well.

Perhaps it is a general law of complex systems. The larger the ambition, the greater the number of banal details capable of interrupting it.

An airplane is worth hundreds of millions and still needs someone to tighten a bolt correctly.

Credit is no different.

There are corporate documents. Financial statements. A schedule of indebtedness. Bank statements. Contracts. Collateral. Declarations. Certificates. Information on the purpose of the funds. Depending on the operation, there are appraisals, registrations, insurance, receivables, property documents, and a variety of attachments that look excessive until the first legal problem.

The individual value of each document is small.

The absence of one of them can stop millions.

The more I work with origination, the more I see that a good part of the advantage lies in turning that complexity into a relatively simple flow for the client.

The businessman should not have to know which fifteen documents each institution will ask for at a given stage. That is our job. Nor should he send the same thing five times to five different people because the process was built around the internal needs of the intermediaries.

There is a kind of institutional ego in the way the financial system frequently operates. Each participant considers it perfectly natural that the client adapt to his own organization.

The bank has its checklist.

The fund has another.

The lawyer has his folder.

The broker keeps a copy.

The accountant sends another version.

The client becomes a kind of involuntary messenger between systems that do not talk to each other.

Then everyone calls it personalized service.

It is hard not to laugh.

The problem would not matter so much if each operation happened once a decade. But companies need capital repeatedly. Families buy and sell assets, reorganize debts, make direct investments, enter club deals, distribute wealth, and go through generational changes.

The same information is reconstructed several times.

That is waste.

It is also risk.

When several people keep different versions of the same financial reality, sooner or later some decision will be made on the wrong version.

That question seems particularly important in family offices.

A family with significant wealth has exactly the inverse problem of the small investor. It does not suffer from having too little financial information; it frequently suffers from having too much, scattered in different places.

There are investments at different banks.

Corporate stakes.

Properties.

Debts.

Holding companies.

Contracts.

Private operations.

Tax documents.

Possibly assets abroad.

Collateral pledged in some operations.

Capital commitments made to funds or companies.

One child knows one part. The founder knows another. The lawyer has certain documents. The accountant, others. The banker knows only what sits at his institution.

It is perfectly possible for a family to own R$ 200 million and for nobody to be able to say in fifteen minutes exactly what its consolidated net worth is and how much of it is actually available.

That is not poverty of capital.

It is poverty of organization.

Perhaps a family office begins producing value precisely there, before choosing any investment.

Organizing reality.

There is something almost offensive to the financial industry in that conclusion, because organization looks like a service inferior to allocating billions, selecting managers, or sophisticated private operations. But perhaps it is like a building's foundation: nobody invites friends to admire the buried concrete, though everything else depends on it.

A family cannot allocate capital seriously if it does not know what capital it has.

It cannot take on debt intelligently if it does not know its other obligations.

It cannot assess concentration without consolidating positions.

It cannot decide how much to put into a club deal if it does not know how much capital is already committed in other illiquid investments.

A good decision begins in a back office that works.

That also begins changing my view of multi family offices. For a while I saw them mainly as a way of sharing specialized infrastructure among several families: investments, tax, succession, credit, access to products and private opportunities. I still consider those economics important.

But perhaps the real gain of scale lies in the invisible infrastructure.

An isolated family may not justify building systems, processes, specialists, and routines to consolidate everything professionally. An MFO can do it for several, preserving the individuality of the decisions.

If it works.

That "if" is important.

Because scaling financial organization carries a dangerous temptation: standardizing the family too much to make the system efficient.

Reality does not fit perfectly into categories.

A property can have emotional and economic importance at the same time.

A corporate stake can be a financial asset to an heir and an identity to the founder.

A debt can look expensive in isolation and make sense because it preserves another strategic asset.

Turning everything into fields can produce clarity and lose context.

Perhaps good financial technology has to do exactly the opposite of what many systems do: organize without erasing particularities.

It is an interesting challenge.

And I may be seeing that problem more clearly precisely because my own work is becoming more operational.

When I started as a loan broker, an operation could be kept almost entirely in my head.

I knew who the client was, whom I had sent it to, which document was missing, and who should reply.

With few operations, memory looks like an excellent system.

It is free, fast, and personalized.

It also has one small defect: it stops working exactly when the business starts going well.

The more requests come in, the more states have to be tracked. One operation is awaiting a document. Another went to analysis. One institution asked for clarification. Another refused. A third made a proposal. The client is evaluating. The collateral needs updating. The proposal expires in a few days.

All of it looks trivial individually.

Together, it starts consuming mental capacity.

And the mental capacity used to remember an outstanding item is not being used to understand the client, structure the operation better, or build a new relationship.

It is a poor use of human capital.

Perhaps loan broking has a hidden operational problem. The best professional is valuable because he has judgment and relationships, but his routine forces him to spend much of his time on tasks requiring neither.

The more commercial success, the worse the problem can get.

The broker originates more.

He administers more.

He has less time to originate.

His main talent creates the bottleneck that prevents him from growing.

It is almost an informational version of working capital. Growth consumes structure before producing scale.

I have seen that in other private markets too.

A family office starts with half a dozen direct investments. The founder or adviser knows everything about them. Then come more stakes, funds, properties, credits, commitments, and relationships with other family offices.

Some opportunities arrive through club deals.

Others through businessmen.

Others through bankers.

The diversity increases.

The private portfolio becomes intellectually interesting.

The back office becomes dangerously handmade.

It is easy to forget that a traditional fund embeds infrastructure inside the product. There is an administrator, a custodian, reports, governance, processes, and clearly distributed responsibilities.

When a family invests directly, it gains more control and can capture more of the operation's economics.

It also receives the work that was previously embedded.

A direct stake has to be monitored.

A private credit has to be collected.

A club deal needs governance.

A property needs documents.

A capital commitment has to be remembered.

The investor who eliminates the intermediary has to be careful not to eliminate along with him what the intermediary was usefully doing.

Disintermediation without infrastructure is merely a transfer of work.

That principle may hold for much of the financial market.

The internet and Open Finance promise to remove friction, allow data sharing, and create new forms of distribution. All of it can be extraordinary.

But removing an intermediary does not automatically eliminate the economic function he performed.

The function has to disappear or be executed by another mechanism.

If a correspondent or marketplace can forward a credit proposal to several institutions digitally, excellent. It will still be necessary to collect information, standardize it, send it, receive replies, compare proposals, and follow what happened.

Technology eliminates some phone calls.

It does not eliminate the flow.

That is precisely why the resolution published by the Central Bank this week caught my attention so much.

Resolution BCB No. 206 deals with forwarding credit proposals within Open Banking. The initial scope is relatively narrow, personal loans without payroll deduction and without collateral. So it would be an exaggeration to see there an immediate transformation of the whole corporate credit market.

But the principles are far more interesting than the initial product.

The Central Bank speaks of an assertive and personalized proposal, transparency, comparability, and an agile experience. More interesting still, it requires interfaces able to receive requests, transmit data, send proposals, and track both the requests and the proposals.

Track.

That word interests me more than it should.

Perhaps because it describes precisely an activity intermediaries have been executing by hand for decades.

Where is the operation?

Who received it?

Who answered?

What proposal exists?

What is outstanding?

It is curious that something so basic has to be formalized as infrastructure.

Perhaps it is a sign that credit is ceasing to be thought of merely as a product granted by the bank and starting to be thought of as a flow among different participants.

Two days later, the system's own name changed from Open Banking to Open Finance.

That is symbolic too.

Banking presupposes a central institution.

Finance is a larger field.

I do not want to build a thesis on a change of nomenclature. Regulators change names far more frequently than systems change behavior.

But the direction is interesting.

The client starts being able to carry data and services between institutions. Correspondents can operate in models resembling marketplaces. Proposals can be forwarded, compared, and tracked.

In simple terms, the shelf starts separating from the store.

That can change the broker's role.

The broker whose advantage lies exclusively in having a bank contact will suffer.

The internet has already made contacts less valuable.

Open Finance may make some connections even easier.

But it may increase the value of another part of the work: understanding which operation deserves to be sent to which capital.

When distribution becomes cheap, selection becomes more important.

There is an almost universal tendency in technology to confuse ease of sending with improvement of the result. When sending a proposal to twenty institutions becomes simple, someone will inevitably conclude that the best process is to send it to twenty.

Perhaps it is precisely the opposite.

The cheaper distribution becomes, the greater the need for discipline not to turn credit into spam.

The good originator should be able to use technology to reduce work without reducing judgment.

If an operation makes sense for three institutions, there is no economic reason to send it to thirty merely because a button allows it.

The private market has memory.

A company circulating too much starts carrying a signal.

The lender who repeatedly receives incompatible operations learns to ignore the originator.

Technology can increase the speed with which someone destroys his own reputation.

It is a good reminder that tools do not necessarily improve behavior.

They increase capacity.

If the earlier decision was good, excellent.

If it was bad, now we can err at scale.

That relationship between scale and judgment interests me more and more.

Perhaps the financial system's main problem in the coming years will not be a lack of data, but an excess of it without context. Open Finance will be able to make transactions, products, debts, and other information more portable. That reduces important asymmetries.

But a larger folder of data does not explain the businessman on its own.

Context remains necessary.

Did a company's revenue fall because it lost market share or because it decided to shut down a barely profitable line?

Did the debt rise because the business is deteriorating or because it acquired a competitor?

Did cash fall because there was a loss or because it bought inventory at an extraordinarily favorable price?

The data shows what happened.

Interpretation tries to discover why.

Perhaps the future of underwriting combines the two far more intimately.

Automatic data to verify what can be verified.

Relationships to understand what requires context.

That could make the loan broker's work far more interesting.

Less messenger.

More originator.

The professional would stop being the person who collects files manually and become someone able to build the financial thesis of the operation.

Why does this borrower deserve capital?

Which source should finance him?

Which structure protects both sides?

Which information really matters?

What is merely noise?

That may be the point where the activity starts approaching what I consider a true financial adviser for businessmen.

The client does not merely need someone to find money.

He needs someone able to know his estate before deciding which money to look for.

That difference appeared again in some recent operations.

The businessman comes in saying he needs a R$ 15 million line.

Then we start looking at his whole position.

There is a practically unencumbered property.

There is bank debt with a short maturity.

The company has receivables.

The family keeps a certain amount of liquidity.

The objective is to finance something that will produce a return only after a few years.

Perhaps the correct request is not simply R$ 15 million.

Perhaps it is extending R$ 8 million, freeing a piece of collateral, keeping a reserve, and raising only the remainder in a different structure.

The initial request was a sentence.

The solution requires architecture.

A banker tied to a specific product may have little incentive to reconstruct the problem that way.

Not because he is incompetent.

His institution has a shelf and his job is to find the best solution inside it.

The family office or independent adviser should have another mandate.

Organizing the table.

That may be the function that interests me most.

I do not want to be the person with the best product.

I want to know the problem well enough to look for the best supplier.

That holds for credit.

It holds for investments.

It holds for insurance.

It holds for legal structures.

It holds for international operations.

Perhaps the multi family office is, in essence, an organization for financial procurement on behalf of the estate, though the expression is unpleasantly industrial.

The family defines the interest.

The office buys intelligence, products, and services in the market.

The bank stops being the owner of the client and becomes a supplier.

The manager is a supplier.

The lawyer.

The lender.

The custodian.

That logic can produce a rather powerful alignment if the family office's compensation is correctly designed.

It can also produce another kind of conflict if the office starts receiving too much from the suppliers.

There is never a perfect architecture.

But the position is intellectually attractive because it separates advice from manufacturing.

The adviser can say another institution's product is better.

He can distribute wealth among custodians.

He can seek credit outside the bank where the investments sit.

He can take part in a club deal organized by another family office.

He can perhaps even recommend that the client do nothing.

That last option remains the hardest test of independence.

Whoever earns per transaction has a natural aversion to emptiness.

A quarter without an operation looks like failure.

For the estate, it can be excellent.

Sometimes the best move is not to move.

That requires a relationship whose value is not measured exclusively by activity.

The more I think about family offices, the more I believe their real product is decisions, not investments.

The investment is the consequence of some decisions.

So is credit.

A family can have an extraordinary year because it chose not to sell.

Another because it chose not to buy.

Another because it refinanced a debt.

Another because it entered a private deal.

The estate's performance does not fit into a table of financial asset returns.

Perhaps that is why the best results are hard to measure.

How do you calculate the value of a company that was not sold in panic?

How do you put on a line the collateral that was not pledged and stayed free?

How do you calculate the return on a banking relationship built five years earlier and used only in a crisis?

A large part of patrimonial value appears as a counterfactual.

What did not happen.

That makes the activity intellectually thankless for anyone who has to show a result every month.

A manager can show a return.

A good family office may have avoided a R$ 30 million loss that will never appear in any report.

The client may not even notice.

Perhaps that is how many good structures work: they make disasters improbable enough that nobody sees what they did.

It resembles maintenance.

A well-maintained machine simply keeps operating.

Nobody throws a dinner because a gear did not break.

Until the day it does.

Perhaps that is what a back office is.

Maintenance of legibility and continuity.

Little glamour.

A lot of value when something changes.

That conclusion also begins transforming how I think about my own professional activity. If I intend to keep originating credit for years, I have to build some kind of institutional memory around the operations.

Not merely a client list.

I want to know the history.

Which company asked.

What need.

What documentation it presented.

Which institutions analyzed it.

Why they refused.

What structure was approved.

What collateral was used.

How it performed afterward.

Whether it paid well.

Whether there were delays.

Whether it had to renegotiate.

That history can be worth more than a new prospecting spreadsheet.

An originator who keeps memory learns.

One who merely closes starts every deal from zero.

That creates a cumulative advantage similar to the one I described years ago when I thought about Amazon lending to sellers it already knew.

Every operation should produce information that improves the next.

If it does not, the firm is billing without learning.

That looks like a particularly poor form of growth.

Perhaps the same holds for a multi family office.

Every family is different, but the problems have patterns.

Succession.

Concentration.

Liquidity.

Debt.

Governance.

Private investments.

Banking costs.

International structures.

By serving several families, the office can develop a library of experiences no isolated family would build at the same speed.

That should be one of the benefits of the multi model.

Not mixing estates.

Sharing learning.

The family does not have to personally make every mistake to learn they exist.

That is value.

Perhaps far more than obtaining a few basis points less in fees on a fund.

There is an interesting asymmetry in institutional knowledge. A single client sees only his own history. The adviser serving many families sees patterns.

The risk is believing patterns are laws.

A solution that worked for five families can be exactly wrong for the sixth.

So learning has to increase judgment, not create ready-made recipes.

The same tension exists in credit.

Standardization allows scale.

Context prevents stupidity.

A good system needs both.

Perhaps this week's resolution is a small manifestation of that attempt at the regulatory level. Standardized interfaces to receive, transmit, send, and track proposals.

Standardization handles the flow.

The decision stays with the institutions.

If that works, we may see more correspondents and platforms able to connect clients to different sources of credit.

I do not yet know whether that will produce true competition or merely one more commercial layer on top of similar products.

Probably both.

Financial innovations rarely eliminate the old human incentives.

A comparison platform can start out representing the client and end up favoring whoever pays the highest commission.

A marketplace can widen options and simultaneously learn that certain options are more profitable for it.

The software changes.

The conflicts remain.

That is why transparency of compensation will continue to matter.

And perhaps a genuinely client-oriented architecture has to separate the organization layer from the product layer.

The client should be able to see who is offering, what terms exist, who receives what, and why a given option is being recommended.

That clarity looks almost revolutionary only because opacity has been normalized for so long.

Credit should be comparable.

But comparable does not mean merely the rate.

That is another risk of platforms.

It is easy to sort offers by price.

It is much harder to sort collateral, flexibility, tenor, covenants, the lender's reputation, and the impact on the client's estate.

What is easily measurable tends to dominate the interface.

Then people start optimizing what the interface shows.

It is the old confusion between the map and the territory.

If the platform shows the rate, the client believes the rate is the product.

If it shows the return, the investor believes the return is the investment.

Perhaps good financial systems have to resist the temptation to reduce decisions merely to make them easy to display.

Simplicity is good.

Simplification can be dangerous.

An operation can be explained clearly without pretending it has only two variables.

That ability to reduce complexity without amputating what matters may be one of the adviser's most valuable functions.

The client does not have to read seventy pages.

He has to know which five things can materially change the result.

It is a form of information compression.

Perhaps the good financier is exactly someone able to do that.

Read a hundred things.

Explain five.

And take intellectual responsibility for choosing those five.

That is very different from merely sending a report.

Information is not advice.

Sometimes it is merely a sophisticated way of transferring the responsibility of understanding to the client.

The same holds for credit operations.

I do not want to hand the businessman a table with ten proposals and ask which he prefers.

I want to be able to say: this one is cheaper, but it requires the collateral I would preserve; this one costs more but offers a tenor suited to the asset; this third I would discard because it depends on refinancing too early.

Then the client decides.

But the comparison has to be economic, not merely numerical.

That requires patrimonial context.

Again we arrive at the family office.

Perhaps every path that begins in sophisticated credit ends, at some point, looking at the whole estate.

It is impossible to discuss collateral seriously without knowing what it represents to the family.

It is impossible to discuss tenor without understanding the cash flow.

It is impossible to discuss leverage without knowing the other debts.

It is impossible to decide whether to borrow or sell an asset without knowing the assets.

Credit in isolation is merely a cropped photograph.

The larger the businessman, the less useful the crop.

That may be why I am starting to think of my relationship with clients less as a succession of operations and more as a continuous financial history.

Ideally, when a new need arose, I would not have to ask the client again to explain who he is.

We should already know.

Not in an invasive sense.

In a professional one.

Knowing the companies.

The relationships.

The collateral.

The history.

The objectives.

The existing debt.

That would allow acting far faster and, curiously, perhaps with less risk.

Speed and care are usually presented as opposites.

They do not have to be.

An operation takes long when the information has to be reconstructed.

If the context is already organized, we can be fast precisely because we worked before.

That may be one of infrastructure's greatest advantages.

It turns past preparation into future speed.

The market tends to admire whoever solves a crisis in forty-eight hours.

Perhaps we should admire whoever spent three years building the structure that made the forty-eight hours possible.

Improvisation gets more credit than preparation because it is more visible.

It is a predictable human failing.

We like the firefighter.

We think little about the engineer who kept the building from catching fire.

In wealth, I prefer the second.

I do not want the family to depend on heroism.

I do not want the loan broker to have to discover everything on Friday night because the client needs money on Monday.

Heroes are expensive.

Processes are less photogenic.

They work better.

That may be the discovery of 2022.

For years I tried to understand the moment when capital meets the borrower.

Now I see that meeting is merely the visible part.

The operation began days, weeks, or years earlier.

It began when the businessman built the track record that will now be analyzed.

When a piece of collateral became free or was committed.

When he chose his bank.

When he organized or failed to organize the numbers.

When he began the relationship with the originator.

When the family office decided to keep a certain amount of liquidity.

When an institution defined its credit appetite.

The closing is the point where all those earlier decisions finally appear together.

Perhaps that is why some people seem to obtain money very quickly.

They did not start yesterday.

The relationship existed.

The documents were ready.

The estate was mapped.

The operation was comprehensible.

The capital knew who was bringing it.

We call speed what is frequently merely invisible preparation.

That is a good lesson.

It may apply to the business I am building for myself too.

If I want to originate more operations without becoming an administrative operator on each one, I have to turn part of what I now carry in my head into process.

If I want to preserve relationships, I have to reduce the time I spend looking for information.

If I want my reputation to accumulate, I have to remember the outcome of previous operations.

If I want someday to work with wealth more broadly, I have to learn to consolidate context, not merely to close credit.

I do not yet know what final form that will take.

There is no reason to pretend I do.

Perhaps I will continue as a broker.

Perhaps the activity will evolve toward something closer to advisory.

Perhaps there is a combination with a family office.

Perhaps technology will completely change how we do this work.

What matters is that the problem is becoming very clear.

There is an enormous quantity of financial value trapped in fragmented information and handmade processes.

Good businessmen lose time.

Good originators lose capacity.

Good institutions receive badly prepared operations.

Wealthy families keep their estates on several shelves without a table showing the whole.

The system has enough money.

It has enough specialists.

What is frequently missing is coordination.

That word has come back to my notes so many times that it may be trying to teach me something.

Coordination looks humble.

It does not promise to create returns out of nothing.

It merely makes already-existing parts work better together.

But that may be one of the most underrated forms of value creation.

A factory is not worth merely its machines.

It is worth what organizes the machines to produce together.

An army is not a collection of soldiers.

An orchestra is not a room full of instruments.

Capital, data, banks, funds, lawyers, documents, and advisers do not automatically form a financial system for a family.

Someone has to organize.

It is possible the great business lies exactly there.

Not manufacturing every instrument.

Making the instruments talk to each other.

I do not yet know how to build that machine.

But I am beginning to be able to see it.

Leo Bentier