40-year Morgan Stanley vet dishes on the secrets to investment banking success
James Runde's 40th anniversary at Morgan Stanley was in 2014 and marked the longest tenure of any investment banker at a single institution. The industry may have morphed significantly over that time, but Runde is keen to impart career advice for the new generation of investment bankers on how to handle client relationships, deals and competitors.
Emotional intelligence is the key to success in investment banking, believes Runde - so much so that he's written a book about it called Unequaled: Tips for Building a Successful Career Through Emotional Intelligence. Here are his tips to success.
1. Don't be a 'hired gun'
As a high school student, Runde worked as a radio DJ, a latrine cleaner at a military base and a pickle-packer for H.G. Heinz. He joined the Navy through the Reserve Officers’ Training Corps (ROTC) after graduation. After leaving the Navy in 1974, he joined Morgan Stanley as an associate in the corporate finance department, which he says is the "the hard-core investment banking division of Morgan Stanley".
After five years, Runde became a vice president, and three years later he was promoted to principal. Two years after that he was promoted to managing director, and 15 years after that he became a vice chairman at Morgan Stanley.
“I showed loyalty to a firm and they rewarded my loyalty,” Runde said. “Compare that to jumping from one place to another every three years; you’re just a hired gun – you’re perceived as a mercenary just in it for yourself. You have balance your priorities on a short-term to intermediate basis, asking yourself ‘Where can I make the most money versus where can I build a long-term career and earn some loyalty?’”
2. Know your next move
In banking, during your first three-to-five years, you process business someone else brings in – some rainmaker gets an assignment or sets up a transaction but needs junior people to make it happen. Your success is based on how well you navigate different bosses while juggling different assignments.
“When I first started out at Morgan Stanley, it took me 10 minutes to figure out that the woman on my right was smarter than I was and the guy on my left was working harder than I was, so I had to find a third dimension, otherwise I knew I’d become a commodity,” Runde said. “Emotional intelligence or EQ is the secret sauce to career success.”
So what happens next? Once you start dealing with clients, you have to develop an entirely different skill-set from your early years. Not only do you need to empathise and connect with clients over the long-term in order to originate deals, but you also need to understand how to manage a team.
“[As a managing director,] how are you going to keep everyone engaged and happy and make sure good work is being done?” Runde said. “It’s like herding cats or managing the New York Yankees, dealing with high-powered personalities and trying to keep everybody happy.”
3. Adapt or die
Hard work and intelligence are a given, so if you want to survive in investment banking and make it up the ranks, you need more. The first of these skills, says Runde, is adaptability. Over the course of your career, you’ll have to deal with different bosses, clients, products, geographies and demands – some people can adapt relatively easily, while some people can’t.
“Don’t say ‘I only want to do these types of deals or focus on these types of products,’” Runde said. “When you’re starting out, you’re not pitching, you’re catching – they’re telling you what they want you to work on.”
4. Collaborate, you're not the Wolf of Wall Street
Investment banking is undoubtedly competitive and political, but banks won't promote you unless you can work as part of a team. 'Collegial' is a word you'll hear all the time, so listen to the advice.
“As a managing director, you want the teams you oversee to work and play together well like kindergarten,” Runde said. “Some people struggle with that, and so other people didn’t like them or trust them – they wanted to spike the ball by themselves, but a global company has complicated problems and you can’t do it all by yourself.
“Nobody’s smart enough to figure everything out by themselves, and some people struggle because they couldn’t work with teammates, or their colleagues didn’t trust them because they tried to steal the credit,” he said.
5. Learn empathy
This is the crux of Runde's argument about investment banking success – be empathetic.
“The client has to trust you enough to figure out the problem – companies in these big competitive industries don’t want to tell you their problems,” Runde said. “The key is relating to people, and that takes empathy.”
If you can make it to the point where clients trust you, the so-called 'trusted advisor' status, then you've already made it past the stage of endless beauty parades. “At that point, a run-of-the-mill service provider will just be competing on price, because you haven’t differentiated yourself, versus a trusted advisor, who the client will tell ‘I want you to help me with this; here’s the issue’ – compare that to competing in an RFP,” Runde said. “‘One of your competitors brought me this idea, but I don’t really trust them – will you help me think about their idea?’
“Being a good processor, good at details, deadlines and data analysis – when you’re covering big sophisticated clients, that’s not what it is about,” Runde said. “It’s about teamwork, learning to relate to clients and being a really good listener, so that when you give them advice, it’s not a self-serving solution – it’s going to be good for them, not just good for you.”
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