Former bankers bolster Goldman's funds unit

Goldman Sachs Asset Management (GSAM) has taken advantage of the global financial crisis to hire investment bankers weary of job cuts and heavy regulation. Around a fifth of new hires at GSAM since 2008 joined from investment banks, its Global co-chief executive Sheila Patel said, after many frontline financiers sought sanctuary on the "buyside" in a perilous jobs market.
The shift from investment banking, traditionally seen as first career choice for top talent due to its higher pay, has coincided with rising demand from fund firms for the specialist corporate knowledge that investment bankers typically have. Patel said GSAM has increased staff by 25 percent in the two years following the financial crisis. "We found people with a very high calibre that wanted a change or saw how things were going on in their own organisations that made them uncomfortable or worried for their stability," Patel told Reuters in an interview, recalling "a lot of incoming resumes".
Operating from 29 locations globally, GSAM is one of the world's largest investment houses with $677 billion in assets as at June 30. The unit employs around 1,800 people. While recruitment was likely to slow as it integrated new staff, Patel said the trend of investment bankers taking asset management roles would continue as buyside clients demanded more from the teams charged with growing and protecting their money. "(Asset management) is a very different business than it was 10 years ago, there's such an advisory component to it, and such a need to understand the underlying (corporate) fundamentals. That requires a lot of different thinkers," said Patel, who joined GSAM after a stint as co-head of Goldman's Asian equity sales.
"It may well be that the right person on the ground to help our insurance clients from an asset management perspective is someone who has been their investment banker for 10 years," she added, flagging a common need to streamline the asset management strategies of companies formed following several take-overs. Moving bankers into asset management could help Wall Street's biggest banks hold onto talented staff post "Volcker rule", which is forcing some to shut money-spinning proprietary trading units to curb excessive risk-taking. Former Goldman star trader Morgan Sze has left the bank to launch his own hedge fund group, following colleague Pierre-Henri Flamand.