Morning Coffee: The super-friendly bankers who call each other by their initials. Trash-talking compliance ends in a lawsuit
A frequently encountered problem in the financial industry, which has got worse since the invention of electronic communications, is that lots of people have the same name. If you happen to have a colleague called “David Jones” or “Emma Smith”, try asking them – generally, you’ll find that on several occasions they have received email messages that they really shouldn’t. The investment management firm Capital Group has come up with a solution to this problem; when you start work there, they assign you a four letter acronym, loosely related to your initials, and that’s how you’re referred to internally for the rest of your career.
It's kind of a cute system; it allows everyone to be on the equivalent of first-name terms, while maintaining each individual identity so that you know that “GMQH” is in charge of international expansion or “AJNG” is the head of HR. There might be a slight hierarchical element to the fact that some people who have been there for longer have three-letter names (like “RWL”, the vice-chair or “JFJ”, the overall co-ordinator of one of the most important funds).
And the idea is that the four letter name system is meant to reflect an overall culture that’s very different from the usual Wall Street world, where the CEO might be a former waterskiing instructor who was mentored by the founder, and where that same CEO might end up getting sued by the same founder after they got retrospectively outraged at the board’s culture of high compensation and cronyism. At Capital, apparently ““everybody who joins has this moment where they go, ‘I can’t believe someone was just so nice to me”, rather than bawling them out for making a mistake.
The investment track record that this culture has produced is hard to argue with. All but one of its equity mutual funds have beaten their benchmark since inception, and (despite only marketing under the name “American Funds” and not even having its company name on the outside of its office buildings), Capital is the largest active manager in the world. It’s been described as “cultish”, but only in a nice way.
It shouldn’t really be a huge revelation that if you hire good people, encourage them to cooperate and create an atmosphere in which they feel able to disagree with one another without it ending in tension and conflict, you might get good results. But the financial services industry has only very rarely managed to do anything of the sort. Capital faces all sorts of challenges as a business, not least from the fact that it’s been going since the 1930s and consequently its retired boomer client base are drawing down their equity savings. But you feel that it ought to be an advantage in reinventing itself that the key employees probably don’t actually hate each other, something which surprisingly few firms can boast.
Elsewhere, a new court case in New York throws up another angle on the industry-wide WhatsApp scandal. Monique Thacker, a chief administrative officer at HSBC’s US wealth management operations, is claiming discrimination and retaliation in a lawsuit. She claims that, after HSBC sent out firm-wide warnings in April about unauthorised communication channels, she raised concerns over a WhatsApp chat in which two employees were “denigrating the compliance department”.
And then various things did or didn’t happen, which are the subject of the lawsuit – it’s in its early days so it’s hard to get many details of what’s alleged and denied. But it’s a reminder that conversations in which the compliance department is talked about in negative terms are always a bad idea for anyone concerned about their long term career.
The nasty little secret of the industry is that compliance departments aren’t always right – although there are plenty of useful and hard working employees there, it has its share of the other kind like any other division. And sometimes, it’s actually true that people who don’t understand the industry prevent profitable business from happening simply out of excessive caution, or to avoid having to admit that they were wrong.
But saying that out loud is like arguing with the referee; it’s unsporting behaviour. If you’re angry about a compliance decision, the correct places to complain about it are your long suffering spouse, friends outside the industry, or ideally a pillow. Badmouthing the compliance team inside the office (or worse, in written communication) is the opposite of being a culture carrier – however good it feels to blow off steam, it’s not the sensible thing to do.
The phenomenon of “quiet quitting” hasn’t really had much traction in the banking industry as we’ve all been more worried about “quiet firing” (the practice of only paying your employees the contractual minimum basic salary rather than going the extra mile for a big bonus). But it’s continuing to vex people elsewhere in the economy, and we’re now in the stage of backlash-to-the-backlash. (Wall Street Journal)
Sometimes you have to go where the business is – Steve Drummond and Taki Dermedgoglu are natural resources bankers for UBS Australia, and in the current market that means they have to head West and live in Perth. (AFR)
Frankly worryingly exhaustive analysis on a celebrity website about whether a Game of Thrones actor is in a relationship with a VP in impact investing at Blackrock. (Newsconduct)
Whether they are meant well or badly, with discriminatory attention or not, if you make vulgar jokes about one of your employees’ breasts, you’re likely to lose the ensuing tribunal. (FT)
What happens when a sneaker-related Ponzi scheme collapses? Among other things, you get an expert on sneaker law suggesting that the administrator might have to hire an expert on sneaker marketing to get full value for an inventory of 60,000 pairs of potentially collectible tennis shoes. (Bloomberg)
On LinkedIn he’s “Michael Yule”, Royal Engineers veteran and senior associate in corporate and investment banking. On the paralympic powerlifting stage he’s Micky Yule, Commonwealth bronze medallist for Team Scotland. Congratulations for both achievements. (East Lothian Courier)
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