By now you've probably seen Greg Smith's resignation letter to Goldman Sachs, which he had the New York Times print to make sure the whole world knew what he sees wrong with the firm.
Smith ran Goldman's EMEA U.S. equity derivatives business, distributing product to clients with well over $1 trillion in total assets.
He says the firm has become "toxic and destructive," especially to its clients.
If you've watched Wall Street for any length of time, you recognize Smith's chief concern.
Goldman sells products to clients that they don't necessarily need or want, but they pad the firm's pockets.
Call that "hunting elephants" or "aggressive cross-selling" or "pushing proprietary strategies," it's the same.
Any time a firm looks to its own interests, it's the clients who suffer.
Reps can justify their actions after the fact to soothe their consciences and the regulators, but an unsuitable investment is an unsuitable investment.
They call their clients "muppets" at Goldman, apparently. We could give them the benefit of the doubt and call it a term of endearment, but the point here is that nobody calls a multi-billion-dollar institutional client "muppet" to his or her face.
It's a secret nickname that demonstrates the gap between insider Goldman culture and everyone else.
You don't call your clients names behind their backs. You tell them the unvarnished truth. You're on their side.
And it's worth reminding them of this fact. It's worth reminding them how different you are from Goldman and firms of that nature.
I kind of hope a lot of advisors are buying reprints of Smith's resignation letter from the New York Times to use in their prospecting materials and to send to Congress.
It's the best argument for fiduciary morality I've seen in ages.