For anyone who is a movie buff, this blockbuster can be compared to the classic scenes in the likes of Tom Cruise’s Jerry Maguire and his career-killing “mission statement,” or Howard Beal’s (Peter Finch’s) Networkdeclaration: “I’m as mad as hell and I’m not going to take this anymore.” Except this time, it’s for real. When Goldman Sachs executive Greg Smith quit his job on March 14, he declared, “I knew it was time to leave when I realized I could no longer look students in the eye and tell them what a great place this was to work.”
But this was no internal memo in which he aired his grief. As most are now aware, he went public (verypublic) in his now-viralNew York Timesop-ed.
Time will tell whether Smith ends up honored as a game-changing hero, cast aside as a “whiner,” or largely forgotten, like that airline steward who departed his career via the emergency exit. Remember him? For the record, that was Steven Slater of JetBlue. If you Google him, you’ll find about 265,000 hits from August 2010 … and nothing more.
Like our windmill-tilting Slater, Greg Smith may not enjoy lasting personal fame, but we fervently hope that the message he delivered ends up spurring a permanent cultural shift within the financial industry. Just as JetBlue’s steward represented only the tip of an industry-wide iceberg, Smith’s condemnation of the cultural and leadership changes he saw take place during his decade at Goldman Sachs struck most of us who have been around Wall Street’s block once or twice as illustrative of a global epidemic versus a random head cold.
It really shouldn’t be that complicated. As Susan John of the National Association of Personal Financial Advisors (NAPFA) commented in InvestmentNews, “I think clients want to know that whoever is working with them has their interests at heart, and that there’s more loyalty to the client than to the firm.”
It seems to us that this sort of dedication to investors’ best interests should be a no-brainer — regardless of a firm’s business model, fee structure or service offerings. It seems equally clear that, at least among Wall Street’s behemoths and likely far more widespread than that, it’s all too frequently not.
How do we make meaningful progress toward eliminating financial service environments in which, as Smith alleged, his former colleagues “push the envelope and pitch lucrative and complicated products to clients even if they are not the simplest investments or the ones most directly aligned with the client’s goals”?
Legislation can help. To a point. One need only look to examples such as Bernie Madoff to know that laws will only get us so far when someone is determined to break them. What’s required is an attack on all fronts. As individuals — financial professionals and investors alike — we must share a common passion for championing continued cultural, legal, procedural and educational improvements in all that we do with our investment activities.
To that end, here are some inspiring words to help keep the flame alive: “Let us start a revolution. … I am prepared to die for something. I am prepared to live for our cause. The cause is caring about each other. The secret to this job is personal relationships.”
Greg Smith? Guess again; it’s Jerry Maguire’s mission statement.