Accidental Investment Banker
I just spent the christmas break, reading the book: "Accidental Investment Banker: Inside the Decade that transformed Wall Street" by Jonathan Knee, a former Goldman, Sachs and Morgan Stanley banker, who is now a partner at a boutique advisory firm. I really found the book to be entertaining as well as informative, as the author wrote about investment banking, from the ringside view he had, while working in arguably the two most prestigious firms(Goldman & Morgan Stanley)on Wall Street. He gave a very entertaining account of his time at both firms, in two major financial capitals (London & New york).
I just spent the christmas break, reading the book: "Accidental Investment Banker: Inside the Decade that transformed Wall Street" by Jonathan Knee, a former Goldman, Sachs and Morgan Stanley banker, who is now a partner at a boutique advisory firm. I really found the book to be entertaining as well as informative, as the author wrote about investment banking, from the ringside view he had, while working in arguably the two most prestigious firms(Goldman & Morgan Stanley)on Wall Street. He gave a very entertaining account of his time at both firms, in two major financial capitals (London & New york).
I found very enlightenining his description of the conflicts inherent in the new found penchant for Investment Banks to act simultanously as advisers and principals on various deals. This is bound to raise certain suspicions on the part of Clients as they will always be unclear as to what the intentions of their bankers are eaxactly. Are they giving honest impartial advice or are they working to gain certain information, that the bank may use to win a deal somewhere as a principal.
It is not uncommon nowadays to see Investment banks compete head to head with their established clients in their new found role as Investing principals. One of these occasions prompted Vodafone to replace their longstanding adviser: Goldman Sachs. These conflicts were discussed in a report of The Economist on Goldman Sachs published in Mid-2006. With Investment banks having to rely more and more on profits generated by proprietary trading and principal investments, it is clear that the interests of both client and banker may not always be in alignment.Furthermore, with Investment bankers turning into Financial Supermarkets, "selling" all sorts of financial services. It is unclear if the advice provided to clients, is just that: an honest advice or a marketing ploy to sell other financial products.
It is self evident that this situation provides good grounds for the emergence of "pure advisory" firms that would be free from the conflicts itemised above. And the past few years has seen the emergence and growth of such firms such as: Greenhill & Co., Lazard Freres, Evercore Partners. If there performance in the past few years is an indication, we might be at the threshold of a new enduring and above all profitable business model.
However, the book spent a little too much time, discussing the history of Goldman sachs, that was not exactly material to the discussion in the book. Considering that I had read "Goldman Sachs: A culture of Success" by Lisa Endlich, the portions of the book seemed like a repeat performance and I had to skip a few pages. However as a whole, the book was a wonderful read and I recommend it to anyone interested in both the past and future of Investment Banking.
