I started my first day at Goldman Sachs in 2004. As with all GS employees in New York, I sat through an all-day briefing on the firm, the culture, and the rules of the road. It was the most comprehensive session for new employees that I have ever experienced. That first day and all subsequent days after that while working at Goldman Sachs always exceeded my expectations.
The culture was not only discussed, it was all around me in how we interacted with each other, how we dealt with our clients and how things just got done.
I spent 4 years there as a salesperson (Vice President) in the Fixed Income group, I covered banks and originators, buying their residential mortgages and cross-sold other financial “products.”
While reading Greg Smith's Op-Ed yesterday about Goldman Sachs, I immediately started shouting at my laptop objections to this guy's article. (Note: This Greg Smith is not the Greg Smith who previously headed Xerox Mortgage Services.)
Greg Smith leaves in March, right after the bonuses pay out, which tells me he received a lousy bonus. On the street, we are compensated by a salary and an annual bonus. We all work for our bonus, and it represents the majority of our income. You find out the actual dollar amount of your bonus at the end of the year and it pays out February / March. People tend to leave after the bonus pays out.
In a Bloomberg article published today, Smith's co-workers said he was not very “commercial”. Commercial is a street term (not just GS), it has several meanings, but essentially being “commercial” means you are bringing in profitable business, it is a large variable in computing your bonus.
Greg Smith claims to have a pulse on the whole firm, but how can he? All street firms are divided broadly into two groups, equity (stocks) or debt (bonds) and the two groups never or rarely interact and usually work on different floors.
Then there are public side and private side people within each group. If you are a trader or sales person, you are on the public side, which means you are not privy to the firm's discussions with a client on matters that are not publicly known. As a public side person, sometimes things occur and decisions are made that are private side decisions, these are means toward ends that may or may not occur without your knowledge.
Greg, if you are an equity guy on the public side, there is no way you have a pulse on the entire firm; you just wouldn't have all of the information as to why certain things happen. Plus there is the added layer that you worked in London (we had an office in London??) and the company is based in New York. Greg, you just can't know what you thought you knew.
Smithy, you mentioned you attended a sales meeting, and no one asked how GS could help their clients: since you were in the meeting, why didn't you start up that discussion?
There have been a lot of responses to this op-ed as to Goldman's position as a market maker and how they treat their customers. As a salesperson, I represent my clients but I always know who I work for, and so do my clients, it says so on my card… In the op-ed Greg said, “I have always taken a lot of pride in advising my clients to do what I believe is right for them, even if it means less money for the firm.” Greg, as your therapist, I think I found out the core problem that you have with GS in that one sentence.
As an institutional salesperson, I am careful when dealing with my clients to not “sell from my own wallet.” Just because I would not buy a $150,000 automobile doesn't mean that I couldn't sell Bentley's.
Who are you to say what is right or what is wrong for your clients? It appears you think you know what is best, and somehow you lost your way selling from your own wallet. When I negotiate a trade, and a client says they would only sell for X but we offer X minus Y, I confidentially deliver X minus Y, then calmly ask what they want to do, shut up and wait for a response.
As a salesperson, you can't have all of the information, and the client won't always tell you their motivations. You sit between the client and the firm; you deliver information and perspectives back and forth, ask questions, probe, offer different ideas, but never sell from your own wallet.
Greg, on Wall Street we execute axes and hunt buffalos. If your clients are not expecting that, then you have some dumb clients, but my guess is you are the dumb one. Goldman Sachs is and will always be one of the finest market makers in the world. Those who say otherwise have other motives. Even you couldn't tarnish GS; the stock is up $2.70 today.
Next time you are in America, call me, I am happy to further the discussions. I'll even buy the beers over at Fraunces Tavern.
