Fortunately, while other asset classes may also be guilty of delivering less ultimate value than they should, there is no research I’m aware of that supports the “We’re all as bad as one another” response. However, both AIMA and Mr. Smith are relying on this rather unappealing conclusion as justification for business as usual.
Greg Smith, now notoriously ex-Goldman Sachs , has shone an unflattering light on his former employer just when attention had drifted elsewhere. His brave op-ed in The New York Times will no doubt consume substantial senior management attention in the weeks ahead. A twelve year career which included actively recruiting for the company has culminated with the damning assertion that clients no longer matter to Goldman. Although we don’t know muchabout Mr. Smith, so far nothing has been offered to contradict an image of this loyal proselytizer for Goldman’s culture bitterly concluding that the values he treasured have withered under the pursuit of trading profits.
Whether Mr. Smith is right or not, today’s financial services industry is developing an unfortunate talent for shooting itself in the foot. As banks, brokers, financial advisors and hedge funds move farther away from the concept that the financial sector exists to service the rest of the economy, we may expect the non-finance end of things to respond in ways not wholly to our liking.
About the author: Following 23 years with JPMorgan, Simon Lack founded SL Advisors, LLC, a Registered Investment Advisor, in 2009. Much of Simon Lack's career with JPMorgan was spent in North American Fixed Income Derivatives and Forward FX trading, a business that he ran successfully through several bank mergers ultimately overseeing 50 professionals and $300 million in annual revenues. Simon Lack sat on JPMorgan's investment committee allocating over $1 billion to hedge fund managers and founded the JPMorgan Incubator Funds, two private equity vehicles that take economic stakes in emerging hedge fund managers.
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