'Friction' and 'awkwardness': Inside the 'culture shift' in Goldman Sachs' markets business

There’s a culture shift underway inside Goldman Sachs’ sales and trading business, and it’s causing a bit of tension within the firm.

At a housing finance conference the firm hosted earlier this week, Goldman Sachs’ global cohead of sales, Tom Cornacchia, was surprisingly blunt about a shift in the fixed income division that’s causing some “awkwardness” and “friction.”

“There’s a lot of denial that exists upfront, and that denial is something that we’re trying to push through our system internally,” Cornacchia said.

Essentially, he said, the equity sales and trading model has transformed over the last decade from a pure service-providing business to more of an “agency.”

But now the same thing is happening to the fixed income, currencies, and commodities, or FICC, business as regulatory changes push the sell-side dealer community to become more agency-like.

“It’s always been a client business, but there’s a difference,” Cornacchia said.

Today, it’s much more about “understanding that your bread and butter is a business that you do on a continuum every single day, it’s not positions you put on your balance sheet. And that’s a big culture shift for the fixed income businesses.”

Permanently shifted

“Ultimately, once you embrace the change and embrace the fact that the business model is permanently shifted, permanently changed, it’s not a cycle that you sit and wait for it to come back,” he said.

Cornacchia said that recognising this shift was still a “contentious” issue within the firm, but that he and his coheads were trying lead the conversation around what changes that must be put in place in fixed income.

Goldman Sachs officeBloomberg/GettyTraders work at the Goldman Sachs booth on the floor of the New York Stock Exchange in 2012.

“We’re not stepping out of any business — we’re going to reshape every one of our businesses to adapt to the changing environment,” he said.

To tackle it, he said, the FICC team will need to hold one-on-one meetings with clients to better understand their needs.

While equities sales teams are constantly on the phone with clients and servicing them however they can, Cornacchia said, in the FICC world “there is an expectation every time we’re on the phone that something’s going to happen.”


FICC salespeople expect to make a sale every time they speak to a client, but Cornacchia wants his FICC team to develop long-term relationships with clients, like the equities team has.

“We are pushing that agenda internally so that you guys can get can get the best of Goldman Sachs without having to worry about what you’ve got to deliver on the phone call,” Cornacchia told conference attendees.

“Ultimately it’s the overall length of the relationship — the continuum of the relationship — that’s most important to us,” he said.

The comments shed a bit more light on the shift underway at Goldman Sachs. Business Insider reported earlier this week that the bank is focusing on cross-selling.

Its securities cohead, Pablo Salame, recently met
with Deutsche Bank analyst Matt O’Connor, and said that one long-term goal is to sell more products to existing clients.
The firm in February promoted Jim Esposito to chief strategy officer of the securities division and tasked him with growing the client franchise.

In a note announcing that appointment, Salame and securities coheads Isabelle Ealet and Ashok Varadhan said that the industry was “undergoing extraordinary change” and that many of Goldman’s competitors were retrenching from businesses and regions.

“The ability to deliver the full range of products and services we offer to our clients is more valuable today than any other time that we can recall,” the note said.

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