If Goldman Sachs does one thing well, it’s cookies.
The in-house kitchen of the banking powerhouse’s London headquarters is revered around the city for its sumptuous baked goods. Throughout the financial crisis, as lesser names’ confectionery fell from grace—remind me to tell you how I predicted Lehman’s collapse after suffering its biscuits—Goldman’s quality maintained.
The company is also renowned for being able to call on the big names to attend its investment conferences. Last year, the guy who invented Google Glass was top speaker. No journalists were allowed in his session—the eyewear hadn’t yet been unveiled to the press—in case we spilled the beans.
This year, Goldman Sachs shut the whole event to the press to enable investors attending to speak more freely. Not a problem for CIO, as we had a special invite—and one that included cookies.
“This way please,” says a member of Goldman Sachs’ hospitality staff. “They’re waiting for you through here…” And indeed they were. Five freshly baked Goldman Sachs cookies. Two chocolate ones, two raspberries, and a…
“Hi, Liz!” says Tony Broccardo, CIO of the Barclays UK pension fund. “Good to see you.” (You didn’t really think I’d come just for the cookies, did you?)
“Liz, you get a private audience,” follows Barry Kenneth, CIO of the Pension Protection Fund. “Aren’t you lucky?”
Neil Nuttall, co-CIO of Goldman Sachs Asset Management’s global portfolio solutions group, is also at hand as the three have just presented a panel to the main audience.
“Partnerships with providers are give and take: Both sides must do what they have said they will do, and both sides have to understand each other.” —Barry Kenneth
“OK, so let’s start from the top. What did you all just say?” I ask, as the PR dishes out coffee.
“We were talking about ourselves,” says Broccardo. “Or our governance structures, really.” Both Broccardo and Kenneth have previously graced CIO’s pages talking about their forward-thinking internal structures, which allow them to make investment decisions—and act upon them—in a timely manner. “We’re focused on what we’re good at,” Broccardo continues, “and constantly consider what we should fire ourselves from.”
I look up from feverishly taking notes.
“In-house teams can end up with the ‘agency issue’ just as easily as an asset manager,” he says.
“And this is where creating strong partnerships comes in,” says Kenneth. “Partnerships with providers—be they asset managers or, increasingly, other financial services—are very important. It’s give and take: Both sides must do what they have said they will do, and both sides have to understand each other.”
“It’s no longer ‘do what we say’, but ‘help us to do what we want to do’,” says Broccardo. “You need someone to help you become—and stay—cutting edge.”
“Banks have become big providers of service in areas where investment consultants have been in the past,” says Kenneth.
These CIOs run pension funds worth more than £14 billion each. They also have had previous careers in banking so know better than most what is available to them.
“Banks have in-house teams that are actively looking to create relationships with investors who have the governance structures to execute the best ideas they are presented with—or give them reasons why they won’t,” Kenneth continues.
“So the model—at least in the range where you guys work—is changing?” I ask, noting no one has touched the cookies.
“For all pension funds, relationships with key stakeholders have changed,” says Broccardo. “Asset managers, for example, can provide excellent execution services for investors with the right governance structures and competences. Across the board, service models are better than five years ago.” Five years is a long time in financial markets when there are industry leaders pushing ahead, but 45 minutes flies past when those leaders’ ideas come at you from all angles.
Our coffee drunk and my notebook full, we wrap up our conversation. Still no crumbs have made it off the plate.
“Go on, Liz,” says Kenneth. “I’m sure no one will mind.”
A nod from Goldman’s Nuttall and I wrap up the cookies before the serving staff can whisk them away. I thank our hosts and the CIOs for their time and we wander back out to the conference floor. Broccardo and Kenneth merge back into the top-quality crowd in attendance—while I slip off with five examples of it in my handbag.