Twenty-one months ago, the head of my desk held a meeting after the close to announce the hire of Max, a new sales trader. I know it was exactly 21 months, because the next morning I was brought into the back and asked to hand over 30% of my account package. Max was the second coming of Christ and expected to be the strongest sales trader this firm had ever seen. This guy allegedly had the Street in his back pocket, basically “owned” five of the top ten money managers and was going to be an open spigot of order flow. His relationships were solid – the kind you read about.
Giving credit where credit is due, when it comes to landing a job, Max proved to be the best in the business. Typically, my firm would’t give away ice chips in the winter, but rumor has it, after a real snow job, they gave Max a ridiculous two year deal.
The fact that Max worked for 13 brokerage firms (supposedly ran 2 of them) over his checkered 25 year career hadn’t raised any red flags . Let me tell you… six months later, flags were popping up left and right. Max turned out to be complete failure on every level. I can’t tell you how excruciating it is, day in and day out, sitting across from this loser, knowing that he’s probably taking down 3x what I make for doing absolutely nothing. I’m not exaggerating. Max is a slug in a suit.
Another thing that Max must have left off his resume is that apparently, he must have chronic back pain that limits his movement, preventing him from leaning in to make outgoing calls. He does have one talent… it’s more like a gift. Max’s gift is the ability to miss every single announcement, upgrade and all merchandise announced over the hoot. On occasion he’ll ask me what he missed, but for the most part, he just sits there like he’s got Parkinson’s disease, with his mouth hanging open, searching Youtube for his purpose in life. Max loves Youtube.
Here’s where things get really frustrating… Whether you’ve worked on wall street for 20 min or you’re a twenty year veteran, you know that trading room managers can never be wrong. It just doesn’t happen. Ever.
Since the commissions are the only thing that seem to matter on Wall Street, managers are usually selected based sole on the numbers they produce. More often then not, in a small to mid-tier firm, you will find trading managers also tend to be the largest producers on the desk. Wall Street wisdom states that since you bring in the most commissions then obviously you must understand the business better then everybody else in the room and therefore nobody could be better qualified to run the trading floor. You had a great year, you’re a political weasel and your clients were up 37% (more like 20% before burying your loss ratio), so let’s put you in charge of the desk. This is a great position to be in . Now, not only do you get to call the shots, but as a producing manager you get to cherry pick your own accounts and not be second guessed by anyone. Throw in a pinch of insecurity and a splash of pig-headed arrogance and your have the perfect recipe for disaster, a recipe that continues to push the smaller houses closer to extinction.
For those of you who don’t know… The brokerage industry is a business, the trading room is where the rubber meets the road and it is the sales trader who is responsible for leveraging that business and essentially rings the register for the firm. Now, if trading is where the money comes in, it seems only natural that trading managers should have strong managerial skills, focus on creative ways to grow the business, be up to date on current technologies, have strong negotiation skills and excellent judgement. Nope. They would rather just take some insecure boob who had a good year, is no threat to upper management and spend 10 hours a week in meetings trying to figure out why they can’t seem to get production to the next level and break into the top ten.
Normally, when a new trading room manager takes over, despite the fact that he no message of substance to deliver, will push for sales traders to get him out on the road to meet with all top clients. This is a no win for the sales trader. New managers, as a rule of thumb, like to make all kinds of capital commitment promises. This way when the client calls looking to take you up on such an offer, you manager can look you in the eye and remind you that we don’t commit that kind of capital. Then when shit really hits the fan and your client demands only what he was promised, your manager gets on the phone, prints the stock for the client and leaves you looking like an incompetent fool. In the client meeting, the manager blinded by his shiny new sheriff’s badge, will often babble about how great business has been, let clients know he’s theman and that if there is anything they should ever need to feel free to call him directly. I’m sure clients find these meetings truly illuminating and don’t have 8 more exactly like that scheduled that very same week.
There’s a well know blueprint for strategic leadership, that states one key to becoming a great leader and growing a successful organization, where executives can flourish, is to surround your self with smart people. In typical Wall Street tradition, we believe those tactics to be an old wives tale that would be better utilized somewhere else. Instead, what these simpleton managers would rather do is suppress all natural talent, discourage idea generation and all independent thinking. As an insecure trading room manager it is your responsibility to make sure that no ones potential be recognized, keep any future shining stars out of all meetings and continue to create the illusion that the world would crumble without you.
Anyway, back to Max- Forget about growing the business, he’s hurting business. Since Max was hired, revenues produced from just about every account in his account package have declined in excess of 15% year over year and are still falling. In the real world or any other industry, losses would have been cut and Max blown into cyberspace -never to be seen in the business again. That’s not how things work in the egocentrical world of finance. You know what they do? Since nobody (the boss) wants to be embarrassed, they reward him with more accounts. Any large or lay up accounts that come in (that the boss doesn’t want for himself), never pass go and go directly to Max in an attempt to inflate his production, helping to justify Max’s criminal paycheck to upper management.
I’m no psychic, but I’m willing to gamble that it’s three months from now and Max no longer works here. And what really pisses me off is that Max, the slug, is leaving here with an even bigger account list than when he arrived. Now he’s got even more ammunition to stuff into his big bag of shit that he will undoubtedly sell to the next trading room wizard.
Can’t say I’m gonna miss him,
Dopey
