Morning Coffee: Everything you know about this Goldman Sachs banker is wrong. The new banking heroes are lawyers

efinancialcareers.com:

As this profile of Marc Nachmann says, Goldman Sachs CEO David Solomon has “pinned his hopes on … a newly merged asset and wealth management division” run by Nachmann, and “his job security may depend on it”.  The article also correctly summarises the general view of the Street when it comes to Goldman’s ambitions to roughly triple divisional profits from their 2022 level, which could be summarised as “pretty sceptical”.

But sometimes, when everyone is lined up on the same side of an argument, it makes sense to consider the opposite point of view. Particularly if there’s reason to suppose that some of the cynicism is motivated by “negative halo effect” of the consumer finance ventures.

What if Nachmann’s task is achievable?  What if all the conventional wisdom about this business is wrong?  Let’s play devil’s advocate, taking the arguments one by one.

“There’s a lot of management instability there”.  Perhaps.  It’s true that of the four executives highlighted on the org chart at last year’s investor day, three are gone.

But is that evidence that there’s infighting and turf wars?  Or that there was internal conflict, which is now over with a clear winner? Losing big names like Julian Salisbury was no doubt a disappointment, but Nachmann now has a clear run at managing the business without competing power bases.

“It needs to be a stable source of earnings”. It is surprising how many people believe something that almost arithmetically can’t be true. Asset management is a business where the volatility of revenues is dependent on the market, only about a third of the costs are variable, and profits are a small difference of two big numbers.

But although the industry itself is the opposite of stable, it can be a source