Friday, January 29, 2010
Leaving Vampire Squid
"Stockbrokers, AKA financial advisors, were always the other guys on Wall Street, watching their colleagues in the trading and investment banking departments rake in huge bonuses while they were wearing out their fingertips with cold calls. ... Brokers find themselves having to explain to clients why they should entrust money to the firms that employ them. ... Possibly the most compelling of the new opportunities for breakaway brokers is a Chicago firm called HighTower. It offers brokers with at least $100 million under management what it describes as an 'open source' alternative to firms like Merrill and Morgan Stanley Smith Barney. ... HighTower's two founders, Elliot Weissbluth and Drew Kornreich, expanded this model so that brokers affiliating with their firm also have the ability to choose from various custody firms, including JPMorgan Chase and Schwab, and clearing firms like Pershing and Fidelity's National Financial. ... Larry Gilbert, 40, was a heavy hitter in Goldman Sachs' private wealth group in Chicago before he joined HighTower in February 2009. 'I left Goldman because I wanted to be a true fiduciary,' says Gilbert. He says Goldman's pay was structured to encourage advisors to sell Goldman products first. 'During the financial crisis these products didn't hold up,' he says. Goldman denies Gilbert's claims", Matthew Schifrin at Forbes, 18 January 2010, link:
What? Some Vampire Squid products did not perform as advertised? How dare you say that? Off with your head, Gilbert. This is why we should separate investment banking from retail brokerage.