free investment advice logo

Here's the deal: You may read the information on the site for free and ask questions. As and when I have the time I'll answer the questions on the website and add new articles. Please do not consider it to be advice - the only free investment advice is to apply your own mind. If you are worried about your investments, I am willing to have a look and improve it. If you are destitute I will try to help free of charge (but you join at the back of the queue). If you are not destitute then email me and we can agree a lower fee (percentage terms, repeating monthly, is fine) than you are currently charged. I have limited time available, and will prioritise the work accordingly, so please be patient. Email me at invest@freeinvestmentadvice.org detailing the situation for which you'd like advice. Rob Baker

A Muppet's view of Goldman Sachs

leave a comment

18 March 2012. It wasn't surprising to me to read in a New York Times piece entitled "Why I am leaving Goldman Sachs", how people "talk about ripping their clients off", and, how various managing directors "refer to their own clients as muppets". New York Stock Exchange The raison d'être of companies is to make a profit - they do this by offering a service or selling a product. And some companies manage to charge higher margins than others for the same product/service, in other words they are better at "ripping their clients off". It's only the naive who believe that companies solely have their best interests at heart. The only thing that was surprising was that Greg Smith (a South African who last week resigned from Goldman Sachs) wrote the piece at all - most participants in financial services companies are too scared to speak their mind so freely - it's career limiting.

Smith schooled in Johannesburg

Smith hails from Johannesburg, South Africa, where he schooled at King David's Linksfield, and was a top ping pong player.

This muppet's experience of Goldman Sachs

I interacted with Goldman Sachs for about a year. I've also worked extensively with financial sales-folk, and they are generally friendly & wonderful people to be around, but so overwhelmed by the ever-growing range of products they have on their menu, that they don't have an intricate knowledge of many of them. The Goldman Sachs salesman I worked with was the most persistent financial salesperson I've met, and had a deep knowledge of his product. He was very good at figuring out where the areas were in our business that Goldman Sachs could potentially work with us, and pitched a fairly complex derivatives solution to one of the issues. I was impressed at how well Goldman Sachs are connected, with the solution allowing them to act as the middleman, connecting buyers with sellers, and taking their cut at very little risk to themselves (they never ever told me enough to figure out what their cut would be!). I was well aware that Goldman aren't a charity and were aiming to make money out of the deal, and I paid attention to what their interests were, and how they, as a conflicted party, might want to close the deal even if it wasn't in our interests. I think that the mistake that some of us muppets make, are that the financial solutions are so complex, that we place trust in our counterparty that they are looking after our interests, rather than taking the effort to figure out the products. In my particular case, after a few meetings, I decided that there were better solutions to the issue than what Goldman Sachs proposed (and getting them to let go of that was like trying to tear a bone from a pitbull terrier).

Goldman Sachs investment conference in London

During the process of working with them, I was invited to a Goldman Sachs investment conference in London, and was looked after like a king. The conference was at a luxurious estate just outside London, and the investment presentations were first class. There was a lot of sales pressure - Goldman employees were very keen on finding issues in our business and areas where they could help. I remember at dinner a Goldman Sachs executive saying that 98% of people who have attended their investment conferences have subsequently closed a deal with them. So, the investment conferences are free, but there's a huge expectation that you'll do business with them. All companies want to perfect the art of closing deals, but Goldman Sachs are masters at it.

What to take from this

When you're dealing with companies (including but not only financial services companies) carefully consider what their interests are. Clearly one interest would be making money out of you, and this may lead them to direct you to the solution that will make them the most money rather than the one that is in your interests. Products, especially financial products, can get complex - never buy something that you don't understand.

blog comments powered by Disqus

Due to regulations, our emails and this entire website should be considered as having been set up for entertainment purposes alone. Expect errors and omissions. Investment in shares and other financial instruments should be conducted by professional investment experts only. Any use of the information on my websites, emails and newsletters is at your own risk, and by using it you agree that the owners of our websites, authors and associated parties wont be held liable for any losses suffered as a result of using the information. None of the information should be construed as being advice. Our newsletters, articles, discussions and website are not an offering for any investment. It represents only our and others' opinions. Any views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest. Illustrations, forecasts or hypothetical data are not guaranteed and are provided for illustrative purposes only. There are risks involved in buying or selling a financial product. Past performance is not indicative of future performance. Any investment values given are not guaranteed. Investment returns can be volatile. When investing there is always the risk of losing all or a substantial amount of your investment, as well as the risk of illiquidity. There may be advertisements on some pages on this website, and we may earn income from these advertisements. We may earn commission on products invested in or annuities purchased. We cannot attest to the accuracy of the material presented here, and opinions expressed may be changed without prior notice. In any event our liability will be limited to R1, and any court cases must take place in Cape Town. Free Investment Advice is the trading name of South Africa Travel Online CC, a licensed Financial Service Provider (FSP number 43555). You may contact us at invest@freeinvestmentadvice.org