There is an incentive for consultant financial modellers to build complex, hard to understand models. Simple models are easier for clients to maintain and update in the future. Complex models are difficult for clients to maintain. When choosing between simplicity and complexity, there is an incentive for consultant financial modellers to choose complexity. Complex models create client dependence. This means more future revenue for the modeller.
In this handbook, I'm teaching you to build models that are easy to read and change in the future. If you are building models for other people for a living, following my advice may not be in your best interests commercially.
I frequently see evidence of this. Some consultant financial modellers build horrifying complex financial models. This would tend to support my hypothesis. The thing I'm not sure of is intent.
Are they building them that way to create client dependence deliberately? Or is that just how they build?
I often think that modellers are rewarded for cleverness. And complexity is a sign of cleverness.
But to quote Euripides:
Cleverness is not wisdom.
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