Like big banks, life insurers are allocating greater resources to their wealth management units as they look to tap relatively risk-free sources of revenue. Prudential, one of the nation’s biggest firms, appears particularly aggressive.
The firm has already poached some impressive names with equally impressive pedigrees. Within the last handful of months, Prudential has made two big-name hires from Morgan Stanley, one from Goldman, and another from Blackrock, according to Bloomberg. The investment management unit has made more than 40 middle- and senior-management hires since last year alone.
And Prudential is showing no signs of letting off the pedal. Unlike newer competitors such as Cantor Fitzgerald, which has been building its wealth management roster via acquisitions, Prudential appears happy to grow more organically. David Hunt, chief executive officer of Prudential Investment Management, told investors last week that the firm’s preferred growth mode is through individual and team hires.
There’s “a much lower risk, and much higher-probability chance of success” with team and individual hires compared to acquisitions, Hunt said, according to Bloomberg.
Of course, poaching in asset and wealth management has a history of being rather costly itself. While we aren’t privy to Prudential’s model, banks and other brokerage companies have historically paid money managers six- and even seven-figure signing bonuses (in the form of forgivable loans) to recruit them away from their current employer.
The war over talent may be slowing, though, at least when it comes to sign-on bonuses. Representatives from a number of major firms came out last month and said that exorbitantremuneration costs are no longer sustainable, and will be reined in. There’s also a new rule pending that will require advisers to disclose their signing bonuses to clients, which should further slow the game of musical chairs.
Best Banks for Women (eFinancialCareers)
Sallie Krawchek’s new fund is an index of investments. But it’s also an informal compilation of the most gender-diverse financial services companies – banks and investment firms that may offer women a better chance at climbing the corporate ladder.
Rise of the Quants at Goldman (eFinancialCareers)
Goldman Sachs insiders tell us that there’s a subtle shift of power within the technology teams, to the point where it’s the uber-technical guys who are gaining ground at the top.
FICC Cuts (Bloomberg)
The latest round of fixed income layoffs has begun. Morgan Stanley cut an unknown numbers of foreign exchange and liquid flow rates traders last week.
Personal Accountability (Daily Times)
As part of an impending settlement, New York’s top banking regulator wants BNP Paribas Chief Operating Officer Georges Chodron de Courcel fired, along with one other unnamed executive and 12 banks employees.
Huge Fine (Reuters)
Former Deutsche Bank trader Christian Bittar is facing a $17 million fine for allegedly rigging benchmark interest rates. It would mark the biggest personal fine ever administered by the Financial Conduct Authority.
Swiss Hires (Bloomberg)
Private banks in Switzerland are opening branches in other European countries as they look to cater their services to a greater number of wealthy customers. They’re relocating Swiss bankers and hiring locals as a result.
Kotsen Tapped as BofA Credit Chief (Financial News)
Bank of America Merrill Lynch has named Frank Kotsen as its new global credit chief. He’s taking over for Graham Goldsmith, who has retired.
Buzz Around the Office
Saving Detroit, One Goat at a Time (Dealbook)
Mark Spitznagel, founder of $6 billion hedge fund Universa Investments, is investing in Detroit. Not with money though. He’s dumped 20 billy goats off in the worst part of the city so that they can graze on the overgrown grass between abandoned homes. When they’re done eating, he’ll sell the goats back to local butchers and donate the profits. Weird.
Quote of the Day: “If you're not failing every now and again, it's a sign you're not doing anything very innovative.” – Woody Allen