I HAVE JUST had the most enjoyable week working with one of my business partners at his house in the Algarve. I say “business partner” but sadly he has decided to leave the SwissInvest platform and to set up a new broking venture in that corner of Portugal.
He is teaming up with an old chum. Both of them are within spitting distance of their 50th birthdays and have jointly concluded that the time has come to do the same thing – but differently.
They are looking to set up an agency brokerage business in the heart of the Algarve, taking as a motto these wise words from Mark Twain: “Twenty years from now you will be more disappointed by the things that you didn’t do than by the ones you did do. So throw off the bowlines. Sail away from the safe harbour. Catch the trade winds in your sails. Explore. Dream. Discover.”
The basic model will be the same as that of most firms operating in the financial centres of London, New York or Frankfurt, but they will enjoy the benefit of what the founders define as ’fun in the sun’. They are expecting to attract others of their age group who have done their time with the investment banks and who find themselves cast out for having grown too much grey hair. After all, buyside customers often moan that they miss the wisdom of the more experienced members of sales and trading teams who are let go, ostensibly because of their cost relative to younger, junior staff.
I tend to agree with the founders of this new venture that it is not the cost that the large firms fear, but the experience, which often leads these older staffers to object to some of the more fancy ideas which their enthusiastic managers come up with for new “products”. They often see through them as offering more value to the creator than to the consumer and resist imposing them on their clients, many of whom have, over the long years of the business relationship, become personal friends.
ALTHOUGH THEY HAVE ’made their pile’ and might be in a position to retire, most of these people still have the drive and motivation to carry on – the pleasure of the hunt tops the joy of the kill – but they have no further need to dress up in shirt and tie and appear at their clients’ doors equipped with expense accounts and entertainment budgets. Leave that to the youngsters for whom smart hotels and recommended restaurants are still a motivator.
These people see themselves as being just as good and just as professional if dressed in slacks and a polo shirt and have faith that their clients will agree. There is no doubt – as I can attest after having spent a week in April in shorts – that the technology now exists for a trading operation to work as efficiently from this bit of the world, especially with the benefit of the generous tax regime which Portugal is currently offering incomers. With a tax rate of 20% and with the favourable cost of living, working in the Algarve could in fact be a self-financing operation.
The partners are aware that this might not be the right move for families with children in education, but their ’target audience’ as far as associates is concerned is the generation where the kids have left and where the ‘other half’ doesn’t mind a bit of extra down-time by the pool.
Talking to them, they are already thinking beyond the simple bond-broking model and considering their project in terms of the difference between the Westfield shopping mall and Harrods. Both offer one-stop shopping, but full-service investment banks are like Harrods, whereas our lads see room for a shopping mall with a variety of independent but complementary businesses under the same roof – or in their case, sunshade. They would like to see all manner of capital market professionals put down roots in the area and pool – no pun intended – their experience under one banner, but with no more than fee-sharing arrangements among each other – just like a shopping mall as opposed to a department store.
I MYSELF, ALONG with a friend, had a similar idea 20 years ago – but we failed. This was in part due to what was then the aggressive move of commercial banks into investment banking. Balance sheet was everything and, as we know, fee business was becoming tied to the amount of balance sheet for hire. The cataclysmic result of this development has been there for all of us to see. Under pressure from regulators and shareholders, commercial banks are both pulling away and being pushed away from “casino banking”. This is creating a vacuum which my mates want to fill with loosely connected but motivated and experienced professionals who want work to be fun again.
I once coined the phrase that what we do used to be fun, then they took the fun out and put a lot of money in instead. Now, they’ve taken the money out but have failed to put the fun back in.
Experience or not, the lifespan of any top-flight market operative is limited. The big career – and the same goes for corporate law, accounting and many other professions – is made when the individual is the thrusting young thing in his or her mid-30s who impresses the senior management of his or her employers’ clients. That senior management will be in the mid- 50s. By the time the young banker or lawyer is 50, that management will be long retired and the new bunch will be wanting to choose its own 35-year-old wunderkind.
The window of opportunity is limited – at over 60, I can attest to that – but the idea is to give those who have done their bit a chance of a last hurrah. My mates’ website, still under construction, shows the principals not in suits with serious faces but sitting in the sun looking relaxed. If it is true that being serious does not make a bad deal good, then it must also be true that having a laugh does not make a good trade bad. The boys are taking quite a risk but I take my hat off to them and wish them all the best. My phone number is…
