Here is an excellent piece that we'll need in the archive;it fortells the undercurrents of what is to come full article click to get..
Goldman Hires Pulitzer-Winning Journalist to Snare Millionaires
By Anthony Effinger
Feb. 22 (Bloomberg) -- The conference started with a cookout at the Mandarin Oriental hotel on Elbow Beach in Bermuda and ended with a talk by 23-year-old Lauren Bush, an anti-hunger activist, former model and niece to President George W. Bush. In between, executives at Goldman Sachs Group Inc. taught scions of wealthy families how to invest in hedge funds.
Last October's ``Next Generation'' gathering was a small prod in Goldman Sachs's push into the lucrative profession of private banking. It's an area of finance that New York-based Goldman -- the world's largest securities firm by revenue and profit -- doesn't dominate. Instead, Swiss and U.S. banks reign.
Ranked in assets held by clients with at least $1 million to invest, Goldman comes in at No. 12, with $177 billion as of 2006, according to Scorpio Partnership Ltd., a London-based wealth management consultant.
Goldman Sachs is shooting for individuals with $10 million in financial assets or more -- not counting the beach house, Lamborghini or art collection. The set of ultra-rich isn't tiny: Individuals with a minimum of $30 million totaled 94,970 worldwide in 2006, up from 85,400 in 2005, according to a report last year by Merrill Lynch & Co. and Cap Gemini SA. Their assets rose 17 percent to $13.1 trillion in the same period.
With U.S. housing in retreat, global stock and bond markets shuddering and competitors taking subprime-related writedowns, catering to the rich can offer a measure of stability and steady profit.
``Rich people as a business model are sensational,'' says Russ Prince, president of Prince & Associates Inc., a Redding, Connecticut-based consultant on financial services for the wealthy. ``They're willing to pay to make it easy on themselves. They don't fight over fees if they see value.''
200 Billionaires
Goldman Sachs Chief Executive Officer Lloyd Blankfein says he's pursuing fortunes in Asia, Latin America and Russia. ``In the Arabian Gulf countries alone, there are over 200 billionaires,'' he said at a New York conference in November.
Blankfein put the best face on his company's status as an also-ran in wealth management.
``I'm happy to say we're not No. 1,'' he said. ``We're not maxed out. There's a long, long way for us to go, and we're going to go there.''
Spearheading the push is Peter Scaturro, 47, a former competitive swimmer who looks like actor Ray Liotta from the movie ``Goodfellas.'' He hobnobs with Citigroup Inc. Chairman Emeritus Sanford ``Sandy'' Weill and serves with Maurice ``Hank'' Greenberg, former CEO of American International Group Inc., on the board of the New York-based Foreign Policy Association.
Giant Hedge Fund
Blankfein, 53, hired Scaturro in July after private banking stints at New York-based U.S. Trust Corp. (once owned by Charles Schwab Corp. and now part of Bank of America Corp.) and Citigroup, where Weill was his boss.
Fees earned for managing the money of the rich, cutting them in on private equity deals and planning their estates might ease Goldman Sachs's heavy reliance on its own trading.
Goldman calls itself an investment bank, but in its 2007 fiscal year, ended on Nov. 30, just 16 percent of its $46 billion in revenue came from advising on mergers and helping companies raise capital. Another 16 percent came from money management and brokerage, a segment that includes parts of private banking. A full two-thirds, or $31 billion, came from trading, making Goldman look more like a giant hedge fund than any kind of bank.
That reliance on trading can be a liability when markets stumble and recession looms.
bloomberg.com |
