The retirement of Jim O’Neill, chairman of Goldman Sachs’ asset management division at 55, may have been motivated by more than just the urge to retire after an 18-year career at the bank.
Our research indicates that it’s not just O’Neill leaving. A number of key people have left Goldman Sachs Asset Management in London over the past twelve months – with the alternatives business suffering in particular.
Daniel Dreyfus, managing director at the Goldman Sachs Investment Partnership in New York left last month while Paul Margiotta an portfolio manager at the firm is set to leave later this month. Goldman's alternatives business has also been struggling to hold on to talent in London.
Alison Priestley, former head of long only portfolio solutions within the alternative investments and manager selection group left for Winton Capital Management in January. Jonathan Amouyal, former executive director in Goldman Sachs Investment Partnership, left for the Children’s Investment Fund Management in April. Zubair Ghouse, a corporate credit trader at GSAM, joined hedge fund Providentia Capital in May 2012. And Anna Troup, an executive director in the global fixed income and currency team, left to join Bluebay Asset Management in October.
Assets under management at GSAM remain below their 2007 peak of $868bn at $821bn. The business lost a further $18bn of assets last year, primarily from outflows in its equity, alternative investments and money market funds.
Financial Times said yesterday that O’Neill’s exit was in part motivated by his frustrations that GSAM’s lowly status within the firm. His “strong ideas” to expand GSAM’s equity business and shake-up pay for advisers didn’t come into fruition, it said.
Are there underlying issues at Goldman Sachs Asset Management? Two of the ex-GSAM employees said there aren’t. The bank told us that its asset management division remains “strategic priority” for the firm. Recent promotions confirm this: 12% of this year’s partners came from asset management, compared to 4.5% in 2010.
Nevertheless, there are signs that GSAM is having its headcount reduced alongside the investment bank. Regulated employees at GSAM in London have declined from 233 in February 2012 to 220 currently.
Last November we reported that GSAM seemed to be hiring. In fact, it seems that several of Goldman’s new asset management recruits are simply people who’ve shifted internally from other areas of the bank. For example, Emma Ting Ting Cheung, moved from being an asset management compliance officer to an associate in the alternative investments business in January, while Matthew Knight joined the UK discretionary sales team as an associate after joining as an analyst on Goldman’s exchange-traded derivatives graduate scheme.
Ralph Silva, an analyst at Silva Research, said all asset management businesses are being squeezed: “Total assets under management are under pressure and in an industry which is not overly human intensive, it’s important not to over-extend yourself.” Maybe Goldman’s asset management business simply succumbing to the pressures across the industry.