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Maybe I’m just a grumpy old man. But at least I’m not alone. An old corporate finance colleague told me a few months ago that he’d officially passed his sell-by date. He had now reached his give-away date. He knew because he had attended a management committee and finally reached the point where he really could not understand much more than half of what the teenagers round the table with their PhDs in string theory were talking about. He felt like a dinosaur.
Of course, most of the teenagers had never actually met a client. Clients were something the dinosaurs dealt with. The teenagers thought only in terms of market counterparties, useful for laying off risk, generating alpha, or whatever the buzzword of the day happened to be.
No presence or charisma
It was probably just as well that the teenagers did not meet clients, because people who have made it to the top of industry might not be impressed by geeks in jeans and sneakers, nerdish finance anoraks with no social skills, nothing of interest to say outside their own narrow sphere of activity and certainly no presence or charisma beyond what you find in the average computer gamer.
If that sounds prejudiced, it’s because I am. At one level, the geeks are incredibly smart. The kids who got pushed around in the playground discovered the biggest trainset and got to play with it. By making their business complex to the point of dullness – it sends me to sleep just thinking about what they do – they built a wall around themselves, added a couple of noughts to the end of all the sums (sadly, including their own bonus numbers when they got lucky) and they swung the firm’s balance sheet around to produce results that dwarfed what could be achieved by careful cultivation and servicing of difficult, demanding corporate clients who did a fee-paying transaction every couple of years. It just wasn’t fair.
No manners or culture
If this sounds like stereotyping, I’ll plead guilty as charged. I don’t like these people. They have no manners, no culture, they wouldn’t know how to tie a bow tie, let alone entertain clients at Glyndebourne (OK, they might make it as far as Chelsea), and these days they’re in charge. How outrageous is that?
But every cloud has a silver lining. The good news about the turmoil in the markets is that clients are back in vogue, at least for now. Balance sheets are stretched to breaking point, the geeks’ trainset is looking battered and kind of yesterday, and the boys are having to learn a little humility, which is good for everyone, but especially them. Even in bad times, there is a God.
David Charters’ latest book, The Ego Has Landed, is published by Elliott and Thompson, price £9.99.
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| Date: |
04 Sep 2008
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| Name/Email: |
Axesss ()
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| David, I agree with your idea that those nerds need to be sociable. But your views seem very biased, to say the least.
Yes, clients are important and most of the business comes because of socializing. But Financial services industry has perhaps overdone 'client entertainment'. You don't need nerds but you don't need dinosaur either who hardly have any depth in their discipline and just survive because industry somehow values how well one can tie and bow-tie?
And that points to the main shortcoming we have in business as a profession. Lots of people make to the levels they should not have just because they were social/connected/entertaining. And that is why we see CEOs/Sr Mgmt making so many dumb decisions which become part of b-school cases.
Agree, that business is about people (too). But there has to be a certain level of professional skill. I have seen so many people being hired by bulge-brackets just because of their appearance and blah blah ... people who fail their courses in Finance 101 and Accounting 101!
So 'people' part is imp but should not be overdone!! Financial services is not an entertainment. Promote ppl based on appearance & industry 'll be doomed. |
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| Date: |
04 Sep 2008
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| Name/Email: |
Derivs Banker ()
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| David, the old boys network is slowly disappearing. Why? Because slowly the system is weeding out all the folks that do not deserve to be there. I would rather have a geek with an ego working for me than an unintelligent grumpy old man with an ego because the former is simply going to add more value. Secondly, I work with many quanty/phd folks who you would term geeky who have bags of character and excellent sales skills. Their sales skills would be even superior than those of your type because they actually know what they are talking about. You forget that there are lots of people out there with brains but who can also communicate. Lastly, have you had a look at your clients lately? Clients nowadays are also these geeks you speak of whom I would guess would prefer to do business with people they respect rather than common, poorly educated folk that wear expensive suits. My opinion is that there are still too many people of your type left in the industry. The sooner they are gone the better but it will probably take another 100 years before is happens as I am sure that one or two will somehow be able to slip through the selection process each year. |
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| Date: |
04 Sep 2008
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| Name/Email: |
Waseem Khan ()
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| "They have no manners, no culture, they wouldn’t know how to tie a bow tie, let alone entertain clients at Glyndebourne"
This deeply upsets me. As a comprehensive-school educated Pakistani, I have always been diligent and hard-working to get into LSE, but no I can't tie a bow-tie, I have never heard of Glyndebourne, and clearly I'll never be able to cultivate the manners that someone from the old boys network has learnt their whole life. I'll never make it to the top not because I'm not intelligent enough but because I'm a humble Pakistani not fortunate to get a public school education. |
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| Date: |
04 Sep 2008
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| Name/Email: |
maggie ()
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| Hi David, does old-styled courtesy permits open (never mind prejudiced and unfounded) derogation of your competitors/colleagues? It actually revealed how lacking in style you are. And yes, geeks are informed enough now to know to acquire client and social skills. Some companies actually value them enough to invest in their getting the required 'people' skills, possibly with golf lessons thrown in free. It is easier that way than to teach 'dinosaurs' the technical stuff you know. |
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| Date: |
04 Sep 2008
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| Name/Email: |
Axesss ()
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| Manners? And what are those exactly? Am not for a torn jeans but bow-tie and Glyndebourne?? Comm'on get a life!
And this is the only reason why the US is far ahead of the UK. A country that ruled whole of the world was left behind because this society started paying way too much attention to 'tradition' as opposed to 'merit'. I have nothing against old boys school (and I am not from one) ... those who have that privilege use it .. nothing wrong with it ... but the moment someone starts suggesting everything else outside old school is rubbish, I find that ridiculous.
Let's take an example of Silicon Valley in the US - complete anti-thesis of old boys school. Nerdy? yes, definitely. Successful? Immensely - Microsoft, Apple, Google ... etc etc ... Britain (or whole of Europe) has a single company like that? Except SAP and Skype .. nothing.
Agree, those are different businesses. But do not discount in-depth knowledge and ingenuity in any field. Customer service is definitely imp but there is more to it than customer entertainment.
Offer great products, manage risk well, show them super returns ... rest assured they will bow to you whether or not you know how to tie a bow!! |
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| Date: |
04 Sep 2008
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| Name/Email: |
Vasicek ()
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| I have a Physics PhD for Cambridge, and I am a former academic. By any reasonable measure, I am very smart. However, I don't think this matters one bit. All that matters is that I come up with the goods each year. If I can rip your face off I will, and fill my boots in the process. That is what this game is about.
More seriously, the general level of mathematical ignorance in the market was a major contributor to the current problems - although I have did very well out of exploiting this ignorance. It is not that the geeks (at least this one) didn't know what they were doing, they knew only all too well what they were doing - if they playing field wasn't so uneven we would never have gotten away with it.
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| Date: |
04 Sep 2008
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| Name/Email: |
Wizard of EC1 ()
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| I agree with David. Just because you know how to tie a bow-tie, know how to use your cutlery correctly and act in a cultivated manner, does not mean that you can't build the mother of all spreadsheets. The industry will return to a people based model because trust has been lost on "Geek Chic" products that even the geeks didn't understand.
I've seen Summer Interns arrogantly parade around, dressed like they should be selling the Big Issue, frankly scruffy, expecting the world to give them something because they have been told at Uni ( perhaps the LSE ) that they are smart. Big deal - the industry is full of smart people, what David is saying is that you also need polish and most importanly people skills - presence or charisma.
Waseem - a person from any culture can be well mannered and cultured, but it takes hard work, I suggest you get yourself down to Tie Rack. Remember, the Old Boys clubs are made up of boys that were young once who worked out that being one dimensional just doesn't work. History is littered with hyper-bright people that failed becasue they had no social skills.
Dressed down scruffy Geek Chic is dead ...... and I'll happily dance on it's grave. |
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| Date: |
05 Sep 2008
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| Name/Email: |
Alex ()
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| "trainset is looking battered and kind of yesterday"
Certainly agree with this one. The bank where I work employs dozens of PhD-types to work out structured products, pricing and values at risk. Now we're sitting on $42 Billion of write-offs and more to come. And most of it due to pricing models they developed and no one (including themselves) understands. |
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| Date: |
05 Sep 2008
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| Name/Email: |
Trader 1 ()
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| What a stupid comment. The losses experienced by your bank is due to the nature of the investment banking environment and not the models. The models are there to derive a price based on various information and historical behaviour.
If you had to model the price of a used Ferrari 430 your model may arrive at £100K depend on various factors. However if no one today wanted to buy the car perhaps because the media has been touting that owning such a car would kill you then what is the price of the car? Well in market terms £0 but it is really worth zero? Time will tell but for mark to market purposes a write down will be made. It doesnt mean the model was wrong. It just means the model had no way of incorporating the effect the media had on this car but now needs to be readjusted.
What caused the writedowns was the fact that everyone in the world got greeedy especially the yanks who took out mortgages to buy houses when they probably couldnt afford the shirt on their back. Mortgage brokers didnt care as all they wanted was there commission and banks didnt care about lending as they could sell off the risk to others capturing the spread.
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| Date: |
05 Sep 2008
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| Name/Email: |
Roger ()
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| It's true - phD wizzes who structure and price this crap will fade away and once again the likes of M&A bankers will shine - time to do real business none of this synthetic structured stuff.
Corporate financiars/M&A will rise once again as kings of the city |
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| Date: |
07 Sep 2008
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| Name/Email: |
DominiConnor ()
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| Some PhDs do indeed not have charisma enough to be a headhunter, but if David attended a meeting of the top class golfers he so admires, he would feel equally cut out of the conversation, and after a while would realise that he was being patronised.
But he'd never be invited to such a party (corporate jollies aren't the same thing). David is lucky enough to meet people who are at the top of their game. If Roger Federer applied for any City job, he'd be dismissed as "pretty but dim", most English footballers don't speak better English than most foreign footballers, and professional golfers are easily the least interesting people I've ever met.
David is basically meeting Mike Tyson and asking "do you think it is a good idea to hit people hard ?" and then annoyed that Mr. Tyson does not treat his question with respect. I meet all kinds of people in the City, it's part of what I enjoy about my job. The idea of despising people who are smarter than me, and pretending they lack some crucial skill that I happen to have I regard as rather sad. |
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