Hello readers!
Training may be a relatively behind-the-scenes process for the big-name companies we cover, but it’s a critical part of how firms stay competitive. It also happens to be a running theme in many of our stories this week.
Rebecca Ungarino spoke with Merrill Lynch head Andy Sieg, who explained how Bank of America’s massive wealth arm is opening up more development resources to its 6,500 client associates. That’s a big change that underscores how the full-fledged financial adviser role is transforming from stock-picker to all-encompassing planner working on a team.
CAs help financial advisers out with things like client inquiries on transactions, or seeing a client through on a mortgage application. They’re “the glue that brings everything together,” Sieg said. Now, Merrill’s expanded CA coaching will also train them up in things like investment management, and it’s a way to help get more of wirehouses’ favorite thing (productivity) from FAs.
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Over in the hedge fund world, Bradley Saacks got an inside look at early-career training at Steve Cohen’s Point72 Asset Management (In a conversation with fellow billionaire hedge fund manager Paul Tudor Jones at a conference in November, Cohen said “it’s hard to hire people and get it right.”) New recruits, often straight out of undergrad, start their careers at Point72 with a 10-month program known as the Academy, and, if they graduate, are often placed on investment teams as analysts.
And for analysts on the cusp of becoming portfolio managers, the firm has a program known as the Nines (a 10 would mean someone is totally ready to make the jump.) Jonathan Cain, a managing director at Point72, told us how that training covers more than just investing: A big focus is on managing people, budgeting expenses, and measuring risk. “We want it so they’re not building the plane while flying,” he said.
Dakin Campbell was posted up at Davos this week, and chatted on the sidelines with Blackstone CEO Stephen Schwarzman about succession planning. He learned why the billionaire PE exec avoids public runoffs and favors a more under-the-radar approach and on-the-job learning for top roles. “I’ve always been mystified how companies can have bake-offs among three executives, teach none of them anything, and select one,” Schwarzman said. “The other one or two might leave, and then the third has the responsibility with no experience. That’s why successions are often not successful.”
Totally off topic, but a fun one from Dan DeFrancesco: the explosion of new data sources has people drawing some pretty out-there conclusions, including finding return correlations in things like lunar cycles and how wide your face is.
Some great long reads below, including a deep dive on what’s next for the fast-changing world of alt-data; JPMorgan‘s plans to grow its corporate and investment bank’s user-experience team by more than 20%; and where General Atlantic’s CEO has seen SoftBank go wrong.
Have a great weekend,
Meredith
The alt-data industry is having growing pains after its sudden glow up — and insiders are looking at new pricing models and unlikely customers
Alternative data quickly went from a quirky subset used by only the most sophisticated hedge funds to a multi-billion-dollar behemoth that has investors and companies like Vista Equity Partners, Nasdaq, and Bloomberg diving in.
Last year was an inflection point for the industry, which is adding new vendors every day and putting more and more pressure on long-time players. Once rock-solid business models have been upended, as hedge fund clients have grown more sophisticated and changed their preferences.
Business Insider spoke to a dozen alt-data experts about what the space can expect in 2020 and beyond.
Fortress CEO Wes Edens didn’t show up to board meetings while his private-equity firm racked up a $115 million tab managing local newspaper chain GateHouse
Billionaire and Milwaukee Bucks co-owner Wes Edens did not show up to board and committee meetings as chair of the firm overseeing one of America’s largest newspaper chains, even as his private-equity shop racked up a $115 million tab for its management of it, according to reports from a proxy advisory firm seen by Business Insider, as well as SEC filings.
Edens was the chair of the board of New Media — a public media investment firm spun out by his private-equity firm Fortress in 2013. In it, he placed a large group of newspapers, from small community publications to metro papers throughout New York, Illinois, Texas, Virginia, Arkansas, and other parts of the country. They were operated by a division within New Media called GateHouse.
JPMorgan is hiring to grow a team that designs tech used by its bankers and clients — and it shows the huge impact fintech is having on Wall Street
You could build the fastest racecar in the world, but if the gas and brake pedals aren’t near each other, its top speed won’t matter.
The same thinking applies to building technology on Wall Street. How fast a tool can execute a trade or analyze risk is pointless if it is designed in a way that makes it difficult to use. But getting designers involved in tech projects isn’t always an easy pitch. Technologists can be protective of their work.
Now, JPMorgan’s corporate and investment bank has plans to grow its user-experience team by over 20% to roughly 160 by the end of 2020. In 2016, the group consisted of just 20 people.
E-Trade just unveiled its plan of attack to nab advisers and investors ‘lost in the shuffle’ in the Schwab-TD Ameritrade deal — it includes a hiring push and marketing blitz in an industry that’s under huge cost pressures
E-Trade just gave a look at how the firm is positioning itself amid unprecedented consolidation in the discount brokerage industry.
The firm was seen by many analysts as being left out in the cold when rival firms Charles Schwab announced late last year it was buying smaller rival TD Ameritrade. Now, E-Trade is upping its expense guidance and said it would hire more financial consultants, up from about 410 now to more than 450 by year-end 2020 and more than 500 by 2021.
The CEO of a private-equity giant that invested alongside SoftBank says it pushed too hard for growth without making the economics work first
General Atlantic CEO Bill Ford has seen the SoftBank effect – too much money with too few guardrails – up close.
The private-equity firm, which has $35 billion in assets under management, has a history of investing with SoftBank through its Vision Fund and other vehicles. On a panel with Andrew Ross Sorkin at Davos on Tuesday, Ford highlighted SoftBank’s missteps as part of a broader trend of “the market losing its discipline.”
SoftBank’s money has enabled fast growth, which in the last year has been followed by job cuts and pullbacks at some of its biggest investments.
These 5 paycheck-advance startups have attracted a big wave of VC funding. Here’s a rundown of the fees they’re charging to break you out of the 2-week pay cycle.
Startups are cropping up offering alternatives to payday lending and raising millions in VC funding in the process. These fintechs stress the importance of giving consumers access to earned wages, and issue payroll advances without charging interest.
Some of these payroll offerings are marketed directly to consumers, promising to help avoid overdraft fees or FOMO. Others partner with employers that offer earned wage access as an employee benefit.
The products, all dealing in earned wage availability, have varying limits, fee structures, and eligibility contingencies. Some offer no-interest and no-fee payroll advances and encourage optional contributions from consumers, sometimes called “tips.”
More must-know headlines and people moves
- UBS had 2 multi-billion-dollar clients pull their money out of its massive Americas wealth business, driving overall fourth-quarter outflows
- Bloomberg’s alt-data head jumped ship to start a new business at retail consultant Ascential — and it shows how firms can cut out middlemen and sell data directly to hedge funds
- Payments startup dLocal just expanded its Amazon partnership. We talked to its CEO about how to build infrastructure that lets Uber and Netflix accept local payments around the world.
- SoFi dumps Visa and makes Mastercard its exclusive partner as it gears up to add a credit card alongside its debit card
- A star quant just left JPMorgan for Citigroup in one of the most fiercely competitive hiring grounds on Wall Street
- ‘We fell short in Q4′: WeWork only hit 73% of an internal enterprise growth target in 2019, leaked memo shows
- Billionaire Seth Klarman blames low rates and ‘capitalist excess’ for his fund’s languishing returns — and says we’ve seen only the ‘tip of the overvaluation iceberg’
- Greenlight Capital’s David Einhorn is adding to his bet against Netflix and loading up on gold, a new investor letter shows
- Private equity firm Partners Group just got hit with a trade-secrets lawsuit from a railroad company that says it took investment ideas
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