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Morning Coffee: Former Goldman Sachs ED recalls psychological obstacles to quitting. The Morgan Stanley banker who thinks cufflinks slow him down

There are many things which keep people in the investment banking industry.  Money, for example.  Also, the prospect of more money, and the threat of losing deferred money. There’s also interesting work and pleasant colleagues, for some lucky bankers.  But, as former Goldman Sachs banker Cassindy Chao is refreshingly honest to admit, another thing that keeps people in the industry when they might otherwise be tempted to get out is the sheer psychological trauma of seeing friends and acquaintances get much richer than you. This is especially so when those people were formerly your juniors. 

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Ms Chao had the very best of reasons to leave – she was living in Hong Kong, and quit in order to move back to San Francisco when her mother was diagnosed with ovarian cancer.  But even given that, she describes the experience as “awful”, not just because of the adjustments to her own lifestyle but because “I watched people who worked below me at the company do incredibly well. I visited friends with many Hermès bags in their closets. They'd call me and chat about their far-flung excursions and show off their homes filled with priceless art.”

While at Goldman she apparently reached the rank of Executive Director (which in the Goldman hierarchy is usually considered equivalent to a senior Vice-President, but in a non-US market), and was earning $375k in the mid-1990s.  That’s more or less exactly the point of take-off, when within a space of a few years some people will go from earning “dinner in nice restaurants” money to “actually rich” money. 

If you quit banking a few years earlier, while you’re still on the Analyst or Associate program, then you’ll do so at a point where most of your friend group earns about the same and you’ll lose touch with them pretty quickly because they won’t have time to socialise.  If you quit a few years later then the differentiation will have begun, and you’ll have had time to get used to the idea of having colleagues who are very much richer than you.  But people who leave the industry at the VP level are likely to find out exactly how much they identify with Gore Vidal’s saying “every time a friend succeeds, a little something in me dies”.

There is a happy ending for Cassindy Chao, though.  In a plot twist uncannily reminiscent of a Hallmark Original movies, it turned out that losing her high-pressure job and glittering toys was exactly what she needed in order to find true love.  Again with refreshing honesty, she admits that she would never have looked twice at “Frank” her husband of twenty years, if she’d still be a banker – he tended to wear t-shirts and sandals too much and was “a goofy engineer”.  And partly as a result of this experience, she’s now made a second career working as a bespoke matchmaker for high net-worth individuals who are also now wondering about the things that money – even Managing Director money – can’t buy.

Elsewhere, Jed Finn of Morgan Stanley says that he doesn’t wear cufflinks or a watch because “I like to be unencumbered”. Possibly this means he waves his arms around a lot? Or that he wants to roll his sleeves up and do things at Morgan Stanley Wealth Management.

Finn seems to like to say confusing things in interviews; he also says that of his relationship with Jacques Chappuis and Ben Huneke (the co-heads of the asset management division) that “one and one equals three” (presumably with one left over?). Maybe this is good? He needs to work pretty frantically after being promoted in January. Finn has inherited the target to increase assets under management to $10 trillion, along with a number of regulatory investigations which are “not a new matter”, but which presumably require a lot of attention and meetings.

One way that Finn’s division used to grow assets under management when Andy Saperstein ran it was pretty straightforward – it acquired them.  This doesn’t appear to be on the cards any more, and so his strategy appears to be firstly to cut pricing and onboard clients through E*Trade, hoping to convert them to advisory relationships later.  And secondly, to try to promote the use of AI tools for the wirehouse brokers, to free up more time for them to schmooze, play golf and win new accounts. He says, “The ultimate goal is a voice-activated bot that can execute complex tasks like drafting proposals, rebalancing portfolios, transferring money, and creating performance reports.”  That won’t need cufflinks either.

Meanwhile …

Nobody’s commenting, but it seems that Edward Ruff, the Citi MD who was suspended while the bank carried out an investigation into language he had used talking to a junior banker, has left the firm.  His Citi email has gone to an automatic response saying it no longer accepts messages. (Bloomberg)

Mervyn King, former Governor of the Bank of England, has now taken a job with another venerable but occasionally troubled British national institution – he’s going to be President of Marylebone Cricket Club. (Financial News)

Money Failed! It’s a quote from the Bible, apparently, and it was the theme of a presentation recently made by Bill Hwang to employees at his charitable foundation. This continues to place trades (presumably at substantially lower leverage than he enjoyed at Archegos) under his direction, as he awaits a number of court cases.  (Bloomberg)

Cuts have begun at Barclays, where “a few hundred” layoffs are going to be made across research, investment banking and global markets.  The bank is calling it a “review of the talent pool”, which seems to imply that it’s mostly performance-related rather than cost-cutting. (Reuters)

Dan Blank, who joined as a Partner from Morgan Stanley in 2021, has been promoted to co-chair of Goldman Sachs Global M&A group. (WSJ)

The California appeals court has said they don’t want to set a precedent, and noted that it was an unusual case, but they have upheld the arbitration ruling that Dean Decker has to pay the “breakup fee” for ditching his job offer from Jefferies after signing the contract. (Bloomberg)

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AUTHORDaniel Davies Global Editor

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