However hard a fixed income sales guy tries to be an electronic execution guy, he'll never quite match up. This looks like the message from this week's surprise departure of Tom Cornacchia, global co-head of fixed income, commodities and currencies sales from Goldman Sachs.
Cornacchia is being replaced by John Willian, Goldman's global head of prime services. Willian has fixed income experience in his past (he joined the firm in 1990 as a trader in the mortgage department and ran municipal sales and trading until 2007), but has been more closely involved with electronic execution in the equities space since becoming head of Goldman's consolidated global securities services, futures and execution division in 2008.
Cornacchia is the latest in a succession of big names to leave Goldman's fixed income sales business. Partners and MDs like Joseph Mauro (former head of fixed income, currencies, and commodities European hedge fund sales, co-head of European macro rates sales), Dalinç Ariburnu (former head of EMEA fixed income and currency sales), Guido Filippa (a former MD in European fixed income sales), and Andrew Wyke, (a former MD and head of European rates sales), have all sidled out the side door this year. Cornacchia, however, seemed unassailable.
"People are pretty surprised about Tom leaving," says one Goldman insider. "Everyone thought things had stabilized now, but this suggests they haven't." He says Cornacchia's departure suggests the wind of change that's swept through Goldman's European fixed income sales business is about to sweep through its U.S. fixed income sales business too. Moreover, it suggests no one there is entirely safe.
Cornacchia's exit is being posited as retirement. This may be so: he may yet turn up at a hedge fund. At Goldman, however, retirement can be a synonym for a gentle steer towards the exit, particularly in a year when Goldman is preparing to promote a new round of partners and needs to make space.
Cornacchia gave no prior indication of his intention to hit the golf course. In March he spoke at length at a U.S. housing finance conference about how he was shaking up Goldman's fixed income sales function. The sales team needed to become more like Goldman's equities sales team, said Cornacchia: salespeople needed to develop long-term relationships with clients instead of picking up the phone in the "expectation that something's going to happen". He confessed that this was causing "awkwardness" and "friction" in the sales ranks, but said it needed to happen: "We're going to reshape every one of our businesses to adapt to the changing environment."
Cornacchia, in other words, was saying all the right things. Without him, Goldman's fixed income sales staff - particularly in the U.S. - look exposed.
His departure underscores the new power structure in Goldman's securities business. Jim Esposito, a favourite of Lloyd Blankfein who was named chief strategy officer of the securities division in February, is in the driving seat. In the structure announced this week, Esposito will retain his role as co-head of global fixed income sales, now alongside Willian instead of Cornacchia.
Goldman insiders suggest a new global securities hierarchy is emerging around Esposito and CIO Marty Chavez. Chavez is changing the way Goldman interacts with clients by opening up Marquee - previously an internal software platform - so that clients can access Goldman's risk management tools and other systems directly. In Europe, Michael Daffey, the COO of the equities business who has experience of both equities and fixed income sales, also looks well placed.
In less than two months' time, Goldman Sachs is due to announce its latest round of biannual partner promotions. Partners at Goldman Sachs are selected via a process known as "cross-ruffing", in which existing partners act as advocates for those aspiring to the position. Any Goldman fixed income sales staff who hoped Cornacchia would vouch for them stand disappointed. Instead of a promotion, their reward may now be to keep their jobs.