Tomorrow: STAR-Denver Event
Making More Money? or Who’s on First?
May 15, 2015 Lunch Meeting
by Jon Hokama.
Click Here to RSVP.
What if you got out of bed in the morning to do a public service for 95 million Americans? Is that enough significance to get you out of bed?
Last week, Noreen Harrington shared with the Colorado Financial Planning Association (COFPA) how she did this. Harrington, a Trustee of Adelphia University in New York, is a former managing director at Goldman Sachs, former co-head of Barclays Capital Fixed Income, Compliance Person of the Year (2003) and one of the Top Fifty Women in Finance (1997).
She didn’t just wake up one day and decide to do that act of public service for 95 million Americans. Her decision really started with living a principled life on a daily basis. That’s where her life and ours might be a bit similar.
If you plan to sell your firm to your employees, consider Harrington’s profound advice on how she cultivated that principled life in younger employees in her firm. While her advice is particular to the financial services industry, it’s applicable to any industry.
Developing key employees is as much about what’s implicitly modeled as well as what’s explicitly taught in the mentoring process.
Your example has the most powerful impact on setting the culture of your firm. What is essential to model?
Do thorough due diligence. Ask the hard questions no matter how uncomfortable we get.
Consider a few well-known but not always followed dictums in the financial services industry:
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“Be willing to go against popular opinion.”
In the 1990s, “common wisdom” about investing in dot-com companies was “The bigger the (cash) burn, the better the company.” Since when are wasting money and showing no profit the signs of a great company? Unsurprisingly, lots of financial advisors lost their clients lots of money by following this conventional wisdom.
When Harrington worked for the Stern’s family hedge fund, Canary Capital Partners, she had concerns about Eddie Stern’s superior outlier results. Canary Capital was up 79% in a year everyone else was down. Stern’s results made no sense. Harrington asked him point blank, “Are you breaking the law?” She had hoped his answer would be a resounding “No!” Instead he said, “If the regulators ever look into this, I’ll turn over every mutual fund company that’s involved.” Harrington eventually uncovered the extent of illegal after-hours trading that “skimmed” billions off mutual fund gains that should have gone to 95 million Americans. To separate herself from this scandal, she quit her job.
Popular opinion at the time was that this scion of the Stern family was a genius. Harrington was willing to challenge that–even at the expense of her job.
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“If it’s too good to be true, it isn’t.”
After leaving Canary Capital, Harrington served as Chief Investment Officer (CIO) for Sterling Stamos, for the NY Mets owners. She was asked to do due diligence on a Bernie Madoff feeder fund run by Ezra Merken. Being the CIO, she should have had the final voice on any investment decision. When she was unable to replicate Madoff’s results, she concluded that he was either front-running, which is illegal, or creating fictional results, which is fraudulent. When told that her recommendation not to invest was overruled, she quit this job as well.
Madoff’s Ponzi scheme resulted in the losses of over $20 billion to thousands of victims. Harrington modeled this dictum at the cost of her job.
Toolkit:
What are some company sayings that you’ve bought into?
Examples:
“It’s better to ask for forgiveness than to ask for permission.”
“Do what I say, not what I do.”
Do these sayings help create the employees you want?
