He hoped his one letter would wake people up and changes the ways Goldman Sachs works. His letter, as republished on the Daily Mail online:
Of course, given the fact that there had been reports saying that banking and financial institutions being run by or acting like sociopaths (e.g. see the documentary The Corporation, 2003), that's not surprising.No morality, no integrity, and no future: Why I quit Goldman Sachs after almost twelve years
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Today is my last day at Goldman Sachs. After almost 12 years at the firm – first as a summer intern during university, then in New York for ten years, and now in London – I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it.
To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money. Goldman Sachs is one of the world’s largest and most important investment banks and it is too integral to global finance to continue to act this way.
The firm has veered so far from the place I joined right out of college that I can no longer in good conscience say that I identify with what it stands for.
It might sound surprising to a sceptical public, but culture was always a vital part of Goldman Sachs’s success. It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients.
The culture was the secret sauce that made this place great and allowed us to earn our clients’ trust for 143 years. It wasn’t just about making money; this alone will not sustain a firm for so long. It had something to do with pride and belief in the organisation.
I am sad to say that I look around today and see virtually no trace of the culture that made me love working for this firm for many years. I no longer have the pride, or the belief.
But this was not always the case.
For more than a decade I recruited and mentored candidates through our gruelling interview process. I was selected as one of ten people (out of a firm of more than 30,000) to appear on our recruiting video, which is played on every college campus we visit around the world.
In 2006 I managed the summer intern programme in sales and trading in New York for the 80 college students who made the cut, out of the thousands who applied.
I knew it was time to leave when I realised I could no longer look students in the eye and tell them what a great place this was to work.
When the history books are written about Goldman Sachs, they may reflect that the current chief executive officer, Lloyd C. Blankfein, and the president, Gary D. Cohn, lost hold of the firm’s culture on their watch. I truly believe that this decline in the firm’s moral fibre represents the single most serious threat to its long-run survival.
Over the course of my career I have had the privilege of advising two of the largest hedge funds on the planet, five of the largest asset managers in the United States, and three of the most prominent sovereign wealth funds in the Middle East and Asia.
My clients have a total asset base of more than $1trillion. I have always taken a lot of pride in advising my clients to do what I believe is right for them, even if it means less money for the firm. This view is becoming increasingly unpopular at Goldman Sachs. Another sign that it was time to leave.
How did we get here? The firm changed the way it thought about leadership. Leadership used to be about ideas, setting an example and doing the right thing. Today, if you make enough money for the firm (and are not currently an axe murderer) you will be promoted into a position of influence. What are three quick ways to become a leader in the firm?
a) Persuade your clients to invest in the stocks or other products that Goldman Sachs is trying to get rid of because they are not seen as having a lot of potential profit.
b) Get your clients – some of whom are sophisticated, and some of whom aren’t – to trade whatever will bring the biggest profit to Goldman. (Call me old-fashioned, but I don’t like selling my clients a product that is wrong for them.)
c) Find yourself sitting in a seat where your job is to trade any opaque product with a three-letter acronym.
I attended sales meetings where not one single minute was spent asking questions about how we could help clients. It was purely about how we could make the most possible money out of them.
If you were an alien from Mars and sat in on one of these meetings, you would believe that a client’s success or progress was not part of the thought process at all.
It makes me ill how callously people talk about ripping off their clients. Over the last 12 months I have seen five different managing directors refer to their own clients as ‘muppets’, sometimes over internal e-mail. I mean, come on. Integrity? It is eroding.
I don’t know of any illegal behaviour, but will people pitch lucrative and complicated products to clients even if they are not the simplest investments or the ones most directly aligned with the client’s goals? Absolutely. Every day, in fact.
It astounds me how few people in senior management get a basic truth: If clients don’t trust you they will eventually stop doing business with you. It doesn’t matter how smart you are.
The most common question I got from junior analysts about derivatives [an investment ‘derived’ from share performance] was: ‘How much money did we make off the client?’ It bothers me every time I hear such a comment, because it was a clear reflection of what they were observing from their leaders about the way they should behave.
Now project ten years into the future: You don’t have to be a rocket scientist to figure out that the junior analyst sitting quietly in the corner of the room hearing about ‘muppets’, ‘ripping eyeballs out’ and ‘getting paid’ doesn’t exactly turn into a model citizen.
When I was a first-year analyst I didn’t know where the loo was, or how to tie my shoelaces. I was taught to be concerned with learning the ropes, finding out what a derivative was, understanding finance, getting to know our clients and what motivated them, learning how they defined success and what we could do to help them get there.
My proudest moments in life – getting a full scholarship to go from South Africa to Stanford University, being selected as a Rhodes Scholar national finalist, winning a bronze medal for table tennis at the Maccabiah Games in Israel, known as the Jewish Olympics – have all come through hard work, with no short-cuts.
Goldman Sachs today has become too much about short-cuts and not enough about achievement. It just doesn’t feel right to me any more.
I hope this can be a wake-up call to the board of directors. Make the client the focal point of your business again. Without clients you will not make money. In fact, you will not exist.
Weed out the morally bankrupt people, no matter how much money they make for the firm. And get the culture right again, so people want to work here for the right reasons. People who care only about making money will not sustain this firm – or the trust of its clients – for very much longer.
© (2012) The New York Times
(Distributed by The New York Times Syndicate)
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Frankly, given how the world and society works nowadays, the effect the author hopes to achieve with this resignation letter will amount to nothing. How can this change anything?
