Morning Coffee: Goldman’s new hot job is a financial butler. A hedge fund genius wants to trade the raw material of AI

What an inspired piece of branding from Goldman Sachs’ wealth management division.  Goodbye “private banker” (old-fashioned, boring, sounds Swiss), and hello “personal CFO”.  Goodbye “discretionary mandate” (sounds overpriced, smells of tax evasion) and hello “virtual family office”.  The actual services that very, very rich people need don’t change much over time – a bit of investment advice, a bit of estate planning, a lot of hand holding and paperwork and the occasional concierge service.  But their self-image does, and today’s ultra-high net worth client is more likely to be new money than old, and probably likes to daydream of themselves more as a founder than a duke.  And so, give the (rich) people what they want. 

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Goldman is continuing to hire for its private wealth division, and for the right employees, it might be a pretty sweet job.  Famously, the good thing about working for a family office is that you tend to have a lot of decision-making authority, can invest across a breadth of products, and retain your job even in difficult times. The bad things are that you have to sacrifice your ego to that of your client, your promotion prospects are intrinsically limited, and you’re quite exposed to actuarial risk if the family fortune splits up through death or divorce.

But working for a virtual family office in the context of Goldman Sachs has the possibility to substantially mitigate the last two of these problems for the employees, while helping Goldman to break further into a desired space.  As David Solomon put it at a recent conference, while bankers and traders go home at the end of the week and worry about how they’re going to generate revenue on Monday, wealth management fees roll in on weekends and bank holidays too.

Of course, the quid pro quo for that is that the bankers have to be available at all hours, too. If a billionaire wants to talk about her investments (or about anything else) from a far-flung time zone in the middle of Sunday night, they expect the phone to be picked up in two rings.  But even here, the Goldman environment might make things a bit better for the bankers; although the relationships will always have to be personal, the institutional backing might leave more room for holiday cover, analytical support and general work-life balance.

And in any case, putting up with a certain amount of rough handling comes with the job.  If you think it’s hard being a personal CFO, talk to the personal COO (housekeeper), personal CTO (chauffeur) or personal Chief People Officer (nanny).

Elsewhere, Don Wilson’s eponymous firm DRW doesn’t quite have the profile of similar trading operations like Jane Street or Susquehanna, and its founder isn’t as well known (outside catamaran racing circles) as comparable billionaires like Ken Griffin or even Mike Platt.  But it’s a very interesting operation indeed.  It combines a high speed trading franchise with a lot of hedge-fund-like directional bets.  It doesn’t have outside money and is wholly owned by Wilson and a few of the biggest producers.  And it’s prepared to go where it thinks the money is, even well outside the traditional quant hunting grounds into real estate and emerging markets.

The swashbuckling attitude has sometimes brought it close to the line – the CFTC brought cases against DRW for manipulating interest rate futures in 2013.  But unusually for a Wall Street firm, they didn’t just roll over and settle. (Not having outside investors or shareholders to get spooked makes it a bit easier to dig your heels in).  In the eventual judgement, it was ruled that “it is not illegal to be smarter than your counterparties … nor is it improper to understand a financial product better than the people who invented it”, words which ought to be engraved above the door in every regulator’s office. 

Now Don is moving on to the next best thing – having started trading commodities like oil and copper, Don Wilson himself thinks that the next big futures market is going to be either GPU chips (the ones used in AI datacentres) or even “compute” itself. So we might see the slightly disturbing sight of AI algorithms trading their own raw material.

Meanwhile …

The so-called “Trump Whale” (who is shielding his true identity “for reasons of personal safety and to minimise disruption in my personal life”) seems to have made out even better than people thought – he has another four previously unknown accounts on Polymarket, taking his total profits to more than $70m. (WSJ)

Deutsche Bank CFO James von Moltke is still seeing blue skies, saying that the investment bank “continues to perform quite well across both fixed income and origination and advisory”, and that the trading market share is growing. (Bloomberg)

Artificial intelligence companies seem even more addicted to drama than bankers – Greg Brockman, the co-founder of OpenAI, has returned to the company after leaving three months ago. He has a new role “to focus on significant technical challenges”. (NY Post)

Some potentially extremely messy litigation incoming, as former TCW managing director Jess Ravitch wants to revisit the circumstances of his being “terminated for cause” (the cause being a lot of MeToo allegations) in 2018.  He claims that three internal probes had exonerated him, but the company needed a scapegoat for newspaper stories about a “frat-like” culture.  The company isn’t commenting so far. (Bloomberg)

There might not be many places which make TwoSigma look like a normal working environment, but Sarah Fass will be going there as chief people officer after being in the same role at Bridgewater (PIOnline)

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