Overview: Goldman Sachs is a major integrated financial services firm. Its lines of business include:
- Wealth Management (Retail Financial Advisory Services)
- Asset Management
- Investment Banking
- Securities Trading
- Securities Research
On September 21, 2008 Goldman Sachs successfully applied to become a bank holding company. This subjects the firm to increased federal regulation and will reduce profit-making opportunities in the future. On the other hand, the move is designed to increase investor, creditor and client confidence in Goldman Sachs, largely by giving it ongoing access to emergency funding from the Federal Reserve’s discount window.
Job Openings: See this current list of job openings.
Size: Goldman Sachs reported the following figures as of May 31, 2008, except as noted (Goldman Sachs has a fiscal year ending November 30):
- Employees = 31,495
- Assets Under Management = $895 billion
- Net Revenues = $46.0 billion (full year 2007)
- Operations in 29 Countries
Positives: Goldman Sachs has, for many decades, been by consensus the most respected name on Wall Street. It may have lost a bit of a cachet since it converted from a partnership to a public firm in 1995, but not much. Loyalties to the firm remain high, as witnessed by the alumni section on its website. Admission into its internship programs is highly coveted.
A major attraction of working at Goldman Sachs has been its high levels of compensation, even by Wall Street standards. For 2006 and 2007, annual per capita pay exceeded $600,000. In subsequent years it has averaged about $400,000.
Goldman Sachs has a private wealth management division, which is its financial advisory business. This division serves only high net worth individuals (though the website does not disclose the minimum wealth necessary), and offers private banking, trust company services and financial counseling. The 2003 acquisition of Ayco is the cornerstone of the latter service, which is another term for financial planning. Goldman Sachs also offers family office services.
Through his Berkshire Hathaway investment company, legendary money manager Warren Buffett took a $5 billion stake in Goldman Sachs preferred stock. Taken in September, 2008 during the height of the market crisis, this was a major vote of confidence in Goldman Sachs.
Goldman Sachs also received a $10 billion equity infusion from the Treasury Department as part of the $700 billion financial rescue package. This also helped to soldify Goldman’s financial position.
Negatives: Since becoming a public company, Goldman Sachs has exploded in size. The character of the firm thus appears to have changed, with old days of a tightly-knit Goldman family long gone. The old culture was not likely to remain completely intact through such a radical resizing. Just a few decades ago, for example, total employment at Goldman Sachs was only around 1,000.
Goldman Sachs has been cutting staff. Total headcount was 32,300 on June 30, 2012, a drop of 9% over the prior 12 months and 17% over the previous 24 months. After reporting a profit decline of 11% in the second quarter of 2012, CFO David Viniar announced that “a couple of hundred people” might be laid off, though he also told analysts on July 17, 2012 that “we aren’t going to cut our way to prosperity.” (The Wall Street Journal, July 18, 2012)
In a New York Times op-ed piece published on March 14, 2012, a former employee denounced what he called a “toxic environment” at Goldman Sachs in which clients were to be exploited rather than served. Greg Smith, a London-based vice president in equity derivatives who had spent 12 years at the firm, claimed that five managing directors mockingly called clients “muppets” (British slang for “fools”). He singled out CEO Lloyd Blankfein and president Gary D. Cohn as destroyers of the firm’s culture during their tenure. These executives, in a memo to employees, promised to investigate Smith’s charges, while also indicating, essentially, that he was a “disgruntled” person making sensational claims. CEOs of key competitors such as JPMorgan Chase and Morgan Stanley, in a show of industry solidarity, issued statements that expressed skepticism about Smith’s assertions, especially since Goldman Sachs’ clients are among the richest and most sophisticated institutions and individuals. New York mayor Mike Bloomberg made similar comments, finding an over-eagerness in the media to demonize Goldman and its management.