How it feels when you're a client of Goldman Sachs
I am that person: a sell-side guy who now works on the buy-side. I came from a big U.S. bank to a small investment firm. - A small investment firm. Not one of the big players, or the prestigious houses. Small; relatively unknown.
My firm would like to be a client of Goldman Sachs. But Goldman Sachs is not exactly busting to work with us. This is because Goldman Sachs is choosy: and we are not desirable.
Being a client of Goldman Sachs is like being a customer at a Hermès store and trying to buy a Birkin bag. 99% of the time, you will be told they are out of stock. They are not. I know, from talking to people who work there, that Hermès stores have regular deliveries of Birkin bags, but that they pick and choose who they sell them to.
For example, you're not going to be sold a Birkin bag if you seem the sort of person who's just going to flip it in for a profit. Nor are you going to be sold one if you've never made a purchase at Hermès before. The Birkin bag is something you work up to.
Goldman Sachs has historically been the same. While other banks employed armies of sales and marketing professionals, Goldman kept its sales team slim: it didn't need to sell itself as firms wanted to be its client.
Times are changing, but this attitude at Goldman lingers. While other banks are hungry to do business with us and try to respond to our requests as soon as possible, Goldman staff take their time. Email responses can take a while. Arranging a meeting is hard. Funds still accept this. If you're a hedge fund and you have GS as your prime broker, it means something: it's an endorsement and that helps when you're looking for funding.
There are downsides though. It's frustrating to send emails that don't elicit a response for weeks (if at all). It's equally frustrating when meetings must be booked months in advance- surely no one is that busy?
Goldman's attitude may need to change. Although there's a trend for prime brokers to become more picky, there are plenty of firms out there who want our business. In Goldman's case, being picky has worked for years but the sustainability of that approach is now being put to the test. Under David Solomon, the firm wants to focus more on highly competitive agency business, which is similar across all banks. To stand out, you need good people, good technology, and a good strategy for ensuring best execution. Goldman's spent a long time selling Hermès bags, but as it moves downmarket, it will need a very different approach. People who have the money to buy a Hermès bag don't relish being made to feel inadequate because they're wearing the wrong shoes.
Clive Stafford is the pseudonym of a former salesman in an investment bank
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