Boutique Investment Banker: A Day In The Life

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Chris Ricciardi is the chief executive of Cohen Brothers, LLC, a boutique investment bank in Philadelphia that specializes in asset-backed securities. Ricciardi has been a pioneer in the markets for collateralized debt obligations - or CDOs - and asset-backed securities, first at Prudential and CSFB, then as Managing Director and Global Head of Structured Credit Products for Merrill Lynch.

What's a typical day like for you?

There really is no typical day. This week I'm working on revising our budget for 2006, working with investment banks to line up mandates for CDOs, a derivatives products company, and a real estate investment trust IPO. I'll spend the last part of the week in Europe to meet with investors and explain new developments at the company and talk about a CDO we have in the market before I hustle home for my son's two-year birthday party.

How did you get started?

I grew up in Chappaqua, N.Y. My father worked in equities for most of his life, so I was exposed to the market and investments at a very early age. I studied business at the University of Richmond and after graduating entered a sales/trading program at Prudential.

After a few years at Prudential, I enrolled in the executive MBA program at the Wharton School of Business. I wanted to make a career change into banking and structured finance, which is a difficult transition to make when you're a trader. I finished the program in two years, splitting my time between New York and Philadelphia. I spent the week working at Prudential, and weekends in class.

After earning my master's in 1997, I transferred into Prudential's banking unit. I was one of 75 people to move into its new asset finance group, which would manage its CDO business. During this time, we pioneered the use of asset-backed securities CDO's.

When our manager, Joe Donovan, left Prudential in 2000 to join Credit Suisse, I went with him and became head of U.S. Structured Credit Products. For four years, from 2000 to 2003, we consistently were the leader in the CDO market in terms of underwriting.

It was at CSFB that I first met Daniel Cohen and his team. Together, they created the first bank-trust-preferred CDO to be managed by a third-party. During the three years he was at CSFB, the firm was the top ranked underwriter of CDOs.

I moved to Merrill from CSFB because I saw the opportunity to increase the size of the business and thought the Merrill platform would be better for our plans. By most accounts, we were correct. Merrill went almost immediately to number one and CSFB slipped from number one to not even in top 5.

Daniel founded Cohen Brothers in 2000. The firm has grown dramatically since then to become a dominant player in the CDO market. I see Cohen as being a unique opportunity because it has a great business and platform, but is also small relative to places like Merrill and provides tremendous upside for me and those in the company.

How does being CEO compare to your previous roles?

As CEO, I am responsible for every aspect of our business. I've always worked for large investment banks - where you're talking about smaller roles in huge companies. Merrill Lynch has 54,000 employees and at Cohen we have about 100. At Merrill Lynch, I had a very specialized role, yet at Cohen the roles are broad. There is no such thing as a typical day.

Before, I spent most of my time with clients trying to win new business and overseeing the process of executing the transaction. Now, I spend the majority much time on strategy, positioning the company, budgeting, dealing with staffing issues, legal issues, overseeing the process of raising new money through our funds, mostly CDOs and Real Estate Investment Trusts, and overseeing the management of our assets. In our main business line, we offer trust preferred financing to small and mid-sized financial institutions such as banks, insurance companies, REITs and specialty finance companies. These securities are then pooled and financed in CDOs.

Do you have any advice for an aspiring CDO specialist?

Historically, people fall into roles that are as specialized as CDO's and structured financial products. Yet, increasingly, you're seeing much more active recruiting for managers in this area. To be successful, you need to have a quantitative background, or at least an inclination for working with numbers, because most projects involve modeling or financial structuring. Still, because the products are relatively new, it's critical to be well-rounded. At Cohen, everyone wears multiple hats, whether its financial modeling, trading or marketing.

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