Thursday, May 31, 2012

Facebook Stock: What's Going Wrong?

Just a month ago, among the investing public, nothing was more hip or more fashionable than the planned Facebook stock offering.  This would be the most prominent, most anticipated IPO since Google. Investors from coast to coast--from institutions to moms and pops, uncles and aunts--maneuvered and schmoozed to get a piece of the action. The pre-IPO "road show" was circus-like with the business media clinging to every move of the Facebook management team, especially when the team paraded into New York.  Underwriters spent weeks jockeying for position, while some investors whined when they weren't promised a gold-mine allotment of shares.

A month later, Facebook shares have stumbled out of the gates and fallen flat, and now analysts, market watchers and pundits everywhere are trying to figure out what went wrong. Some blame the lead underwriters (Morgan Stanley, Goldman Sachs and JPMorgan) for mis-pricing the offering, for  over-valuing the company, and for bad timing. Some blame the Nasdaq exchange--at least for the first-day technical blunders. Some blame the worries and threats from Europe.  Some blame recurring fears from retail investors, who shudder and flee equity markets when the going gets rough.

Whatever, share prices that opened at $38/share are now down over 20% in the first two weeks, don't seem to have stabilized, and just haven't found a comfortable first-month trading range. When the IPO was on the drawing board this winter, bankers and traders simply assumed the stock would be comfortably trading in the high 40s now.

What went wrong?  Or what are investors responding to?

1.  IPO Pricing Often underwriters of IPOs are accused of under-pricing shares. Such under-pricing permits a first-day surge and first-day euphoria around the new stock.  Sometimes underwriters are accused of not issuing the stock at the highest price possible to permit the company to generate the highest proceeds possible from the offering.  Aware of this, Morgan Stanley and team may have been extra careful to price the stock to make it attractive to the public, yet maximize the proceeds to the company.

(If the underwriting had been priced (more fairly?) at current prices, the company would have raised about $2-3 billion less in funds.)

2.  Supply vs. Demand.  For much of the past year, the Facebook IPO has been a looming, dominant, and popular discussion topic in investment banking and equity markets. Underwriters, who normally rely on exquisite, near-scientific market intelligence to price shares or measure precisely the market demand for them, may have over-estimated demand after the first day. They may have been influenced more by the "talk" and glow of the underwriting on the first day, less by the actual, expected demand on the second day.

3.  Uncertain Revenue Streams.  With the shares out the door and into the hands of the investing public (including hedge funds, mutual funds, pension funds, and others),  analysts and traders may have realized something they suspected all along.  The company's future revenue streams are more uncertain or undefined than we thought several months ago.  What happens when the number of  users of the social network reaches an inevitable plateau? How will the company reach certain levels of revenue? How will it sustain revenues at that level? And just as important, how will it grow them? What strategies (acquisitions?) will help propel growth? All factors that have impact on the long-term valuation of the company.

Investors, researchers, market-makers and analysts--this week--are asking these questions more emphatically than they did a few weeks ago, when they may have been blinded by the euphoria of the offering, hoping, despite any concerns, to take advantage of the first-day or first-week surge in price.

Some are presenting the same questions to the company and underwriters, questioning whether they explained these uncertainties carefully in regulatory prospectuses or questioning how they could be so imprecise in valuing the company. 

4. Fear of the Fad.  Perhaps some investors, traders and research analysts have fear of the fad. They reason Facebook will remain fashionable until one day it isn't, the day when the next new thing supplants it. The hundreds of millions of account-users are not eternally wedded to it; they aren't locked into long-term contracts, nor is there a substantial cost in fleeing to the next new thing.  This group of investors could be frightened by the immeasurable whims of millions of individual users.

5.  Absence of Bottom-Fishers.  With over 900 million users, an elephantine data base, and a reliable stream of core advertising revenues, the company has a minimum value of some kind, likely still in the billions. That would make it attractive to the market's bottom-fishers, investors who wait for share prices to slide to a perceived bottom and then grab them at a bargain.  With Facebook, the bottom-fishers may be sitting on the sidelines momentarily. They have not emerged en masse, watching the momentum of the slide continue. At some point, the slide ebbs, and they scoop up the bargains.

But where will the slide end? At $20/share? At $15?

Expect the rocky, volatile start to Facebook as a public company to continue, at least until the day in mid-July when Zuckerberg and team have their first earnings conference call with the piranhas from investment firms, research firms, and hedge funds raising their hands to ask what happened and why. That performance could be the pivotal point in the stock's first-year performance.

Tracy Williams

See also  

CFN:  Facebook and Its Underwriters, 2012

CFN: Goldman Sachs and Its Private Equity Investment in Facebook, 2011

Wednesday, May 30, 2012

How to Secure Online Payday Loans

Payday loans occur with several names like the cash advance loan, payday advances, payroll advances, salary advances and so on. Irrespective of the names, it cannot be argued that the usefulness payday cash offers as a short-term loan until the next paycheck. Especially when an unexpected expense pops up such as car repairs, medical bills or other expenses, a cash advance can help close the gap between salaries.

Most people understand the benefits of these loans since they are: quick, secured and an easy way to get the money you need to cover any unexpected expenses of life. But is it easy to apply for an online payday loans? Or is it safe to give personal details for an online money loan? 

Learn how to safely apply for a fast payday loan online.

If you ask whether it is safe to apply for payday loans online? The answer would be, yes and their reply time? well it depends on which company you use. Most companies offer an online payday loan that assures total security of your personal data. It is seriously considered since the reputation invested by the customer in a company can falter if there is no reliability or safety in the data securement causing a quick loss in the business. As protected as it may seem, here are some tips to ensure that your information is secured when applying for a payday loan online:

1. First, check the privacy policy of any payday lender or broker's website. The privacy policy should be clearly mentioned and it should detail the type of information collected and disseminated to third parties.

 2. If you have questions about site security or the security of your personal information, talk to a customer service representative of the company. Ask questions like: Are databases accessible by all employees or only with security clearances? What happens to the information after you close your account? And based on the answers, make your decision. Make use of a FAQ section (frequently asked questions) that can answer most of your queries.

loans images

3. Once you are satisfied that the site will not tamper with your personal information, verify if the application page is safe. Whenever you transmit sensitive data online, which can be for a payday loan or any transaction, there are two things to consider. The first is an added "s" after the "http" line in the internet address of your browser. The second thing to look for is a yellow padlock symbol in the bottom right of the screen. Both indicate that data is encrypted before being transmitted to the website, and ensures that your information is sent to the respective place.

4. Finally it is vital to investigate the lender of an online payday loan and check if your data is safe. Google their name online or check with the Business Investigation Bureau to see if they have any customer complaints against them. It is always good to see what other people have to say about the company you're about to do business with.

If you are ordering a pizza, buying new clothes, or request a cash advance online, no matter what business you do online, it is important to ensure that your information is secure. By using the above suggestions, you can ensure that the cash advance transaction is secure online.

Tuesday, May 29, 2012

Steps in Setting up A Bank Account in Cyprus

Those who are planning to open a bank account in Cyprus due to the many financial benefits it provides will be happier learning that the steps in setting up an individual or a corporate bank account are so much easier. Just follow these step by step instructions and you will soon find yourself with all the documents listing all of the necessary bank information for your self or your corporation.

Individual Requirements to Open a Cyprus Bank Account

Anyone, resident or non-resident, that is of the age of 18 is allowed to open a Cyprus bank account. You just need to present a copy of your passport, an accomplished legal due diligence form, and a utility bill that will indicate your address to the bank in order to process your request. After submitting these documents, you may immediately get the bank details you will need for business transactions including your account number, IBAN no., and swift no.

Corporate Requirements to Open a Cyprus Bank Account

For corporations, you need to submit a set of company formation certificates aside from the following documents required for the bank signatories:
1.    certified copy of pages of their valid passport showing the signature, personal details, and photo of the signatories
2.    proof of residential address of the signatory
3.    bank reference letter that has been issued for no less than six months

Cyprus Bank Account

Aside from these, the specimen signature card signed by the signatories that has been certified by the bank’s branch has to be forwarded for the processing of the proper documents. Although the processing of the application does not require personal visits and it can be handled by an authorized representative of the corporation, the directors and signatories still need to visit the bank representative for interview.  In like manner, this will be the perfect opportunity for the bank officer to certify all the personal documents of the mentioned corporate officers.

Regular Banking Hours in Cyprus

Most of the banks operate from 8:30 to 12:30 in the morning and 3:15 to 6:45 in the evening during summer. Nevertheless, individual and corporate bank account are given .Cyprus online banking services for additional convenience. This will allow corporate officers to perform all of their transactions online after providing them with a password that will give access to their account.

Online Banking Services Offered by Cyprus Banks

The following are list of the bank services offered by Cyprus Banks to their clients:
a.    international wire transfer payments
b.    access to account transactions and account balances
c.    bank transfer from an affiliate bank to another

Additional Benefits of a Corporate Bank Account

Aside from these additional conveniences, you will be provided with these additional benefits:
a.  Multi currency account that allows you to deposit in Euro, USD, Swiss Franc and other currencies
b.  Choice of debit, credit, or checking account
c.  Digipass feature, which allows money transfer from your Cyprus bank account to a third party with guaranteed online security

Oxford Tax Solutions provides affordable tax consultations related to international tax issues combined with effective vehicles that will help your investment achieve tax minimization.

Monday, May 28, 2012

Telltale Signs of a Dishonest Bondsman

You know what they say -- don't drink and drive. Unfortunately, not all people follow this very simple rule and they go ahead and drive while under the influence of alcohol. If they get pulled over by the police, they find themselves spending the night in jail.

If you happen to land in prison for a drunk driving incident, then the one thing going through your head is how to get out of jail fast. After all, who wants to spend a night in prison?

Getting Out of Jail

The most common way to get out of jail is to post a bail, the amount of which is set by the judge. If you have money or credit card and if you have a good credit history, then you can quickly get out of jail. If not, then you might have to spend the night in jail until you come up with the bail amount.

Fortunately, getting out of prison is made easier by a bondsman. What they do is to post a bail on your behalf or sign an agreement with the court that you'll be appearing for all the court dates. If you attended all your court dates, the bondsman will get his money back, if he fronted the money, that is. On the other hand, if you skipped bail and did not attend all your court dates, then the court will go after the bondsman, who will have to pay for the whole bail amount. If this happens, the bondsman can set bounty hunters after you to get his money back.

Bondsman

Looking for a Bondsman

If you don't have the money to post a bail, then you have no other choice but to look for a bondsman. However, there are just so many of them to choose from, all of whom are after your business. After all, he is going to earn at least 10% of your bail bond amount, and this is a nonrefundable fee even if you showed up for all your court dates.

Choosing a bondsman is difficult, especially if this is your first time to use their service. For this reason, here are the warning signs of a deceitful bondsman that you should be aware of:
  • You should be extra careful of a bondsman or a bail bond company that advertises zero down and 5% bail. More often than not, they are making use of the "bait and switch" strategy. Yes, the fee is rather small, but you should know they are probably only advertising this low because they want you to sign the contract, and when they get what they want, then they'll tell you the real terms and conditions of their contract. 
  • You should be wary of new bail bond companies, especially those that have no bail bond insurance. You also have to be wary of bondsmen and bail bond agencies whose insurance companies disallowed them from having an outstanding bond liability. More often than not, they're only after your bond money. They'll look for a reason to return you back to jail and have the bond revoked. Some new bail bond companies are also fly-by-night agencies. Once you've paid the premium, they disappear.
  • A bondsman who insists that you sign the contract first before he answers your questions is a sign of a deceitful bondsman, so is a bondsman who is impatient and refuses or avoids to answer your questions. He is more interested in getting your money than helping you out of jail.
Jennifer Dane works for a San Diego bail bonds company. She's also a blogger who owns a couple of blogs that focus mainly on drunk driving as well as bail and bail bonds. Jennifer also contributes articles to Direct, bail bonds company in CA.

Wednesday, May 23, 2012

"Where Was the Risk-Management Unit?"

Once the world of finance (and the world beyond, too) learned about JPMorgan's earth-shaking $2 billion-plus trading loss from credit derivatives, the finger-pointing and the blame-gaming started.  Where were the risk-management units? How and why weren't the risks of these large positions properly managed? How could what began as efforts to manage credit risks with portfolio hedges end up as shocking market losses and a three-headed monster out of control?

In financial institutions, in stable times, when profit engines hum and business is brisk,  risk-management units remain quietly out of view. They aren't glamor-seeking or aren't permitted to be. You won't see risk-management "stars," as much as you do among the deal-doers in investment banking, particularly in M&A, venture capital or private equity.

Nonetheless, if they are doing their job, senior managers in risk management in normal times are as busy as ever. They touch all aspects of the institution's business. They are charged with managing risks of all kinds--including those related to exposures, counter-parties, borrowers, portfolios, trading positions, and balance sheets.

They are also responsible for anticipating unforeseen risks, "tail" or unexpected scenarios, or even catastrophic events. They must unveil plans to manage these scenarios. They must implement programs or procedures to reduce or minimize existing risks (positions, exposures, borrowings, etc.), if they conclude it is necessary.

When you read about a financial institution involved in a big deal, large transaction, an IPO, or a notable underwriting or learn about its revenue increases, new clients, and expansion to foreign sites, risk-management units are hardly mentioned, even if they are intimately involved in reviewing and approving all such business activity. On the other hand, when you hear about the sudden losses at or demise of such institutions as Washington Mutual, Lehman Brothers, or Bear Stearns, everybody--from pundits to regulators--asks, "Where was the risk-management unit?

"Why couldn't it have prevented the collapse or loss? Who approved the transaction, trade, client, counter-party, or deal? Why didn't it reduce the portfolio of loans or hedge the trading positions or notice the operations hiccups or problems in the documentation?"

Often in these upsetting moments, risk management becomes the scapegoat, and the problems, errors or flaws tend to be related to one or more among the following:

1) Lack of sufficient authority to enforce policies, procedures, limits, and approvals, because risk managers aren't empowered to hold the line with investment and corporate bankers, salesmen and traders.

2) Lack of proper information or delays in sharing details about borrowers, trading positions, balance sheets, and risk exposures (sometimes caused by a reluctance of business lines to admit to errors in judgment or by problems in systems in collecting and summarizing information quickly)

Risk-management units in many places sometimes spend as much time gathering data about clients and trades, ensuring the information is correct and up to date, as they do in analyzing counter-parties, markets, exposures, and portfolios and making the right decisions.

3) Inability to anticipate unforeseen or unusual risks, because of lack of understanding of markets and borrowers, because of too-complex trading and risk models, or the naive conviction that the worst cases won't happen.

4) Over-reliance on complex risk models, familiar techniques and conventional approaches. A reluctance to assess risky scenarios in new, unconventional, more appropriate ways.

5) Inability to quantify the true, actual scope of risks because of flaws or failures in some of the above and in information and analysis. Risk managers may not know the exposure, loan, or trade is as large as it is, because they can't quantify it properly.

6) Neglect because certain risks or risk functions were not prioritized, checked or given proper attention. Risk managers put the issue on the shelf and dismiss it until it is too late--after the big trading loss or after the client files for bankruptcy. 

7)  Errors in judgment, caused by inherent biases in decision-making or conflicts of interests. Risk managers are not able to assert themselves (and make decisions) independently because they are "trying to help" business and marketing managers achieve profit goals or are also trying to maximize revenues, returns and profits to get a share of bonuses.

8) Fraud

At Lehman and Bear Stearns, risk managers weren't empowered or authorized to hold up the stop sign or call time out when their balance sheets grew to excessive levels of leverage or piled on too much in mortgage-related assets. Or risk managers, too, were delusional in their perception of mortgage markets or what they deemed were adequate levels of capital.  Refco, the futures and commodities firm that went bankrupt in 2005was a victim of accounting fraud by one of its own senior managers.  At AIG, risk managers didn't have control over the activities of its financial-products subsidiary and made blatant errors in the analysis of mortgage-related risks.

At Merrill Lynch, we learned, risk managers simply lacked authority to control undisciplined trading activity.  At Long Term Capital, traders acted also as risk managers and stubbornly believed in their models ("relative-value trading") without acknowledging the worst-case scenarios or "tail" events.  At JPMorgan, it's too early draw conclusions. Risk managers, we know now, attempted to manage other portfolio risks. But it elected to use complex trades. In the process, overall risks spiraled out of control, partly because they didn't project extreme cases in the credit-derivatives markets.

The risk-management function at large financial institutions has evolved in many ways the past two decades.  Once, risk management at banks and broker/dealers meant credit analysis, credit approvals, and reviews of counter-parties. Somewhere along the way (the early 1990s perhaps), risk management assumed responsibilities for credit and loan portfolios, trading-related counter-parties, collateral risks, country and political risks, and all forms of market risk from trading positions.

Today, at the largest institutions, risk management's domain is as expansive as the organization's business--touching almost all functions and expanding to all regions and businesses.  In recent years, experts say risk managers must approach the role as "managers of enterprise risk" (the entire organization and all its functions), not just isolated credit and market risks in certain business areas.

Risk managers today and going forward will be asked to oversee, analyze, project, manage and reduce (if necessary) risks related to the following.

1) Credit and counter-party risks, which include the risks of lending money, doing any kind of business with corporations, individuals and government entities, and executing and maintaining securities and derivatives trades with the same. This includes long- and short-term risks, collateralized and unsecured risks. 

2) Market risks, which include all forms of risks from trading and/or maintaining positions in all securities and derivatives transactions. This includes risks from positions related to market-making, brokerage, specialist, clearing, and proprietary-trading activities. And it includes long- and short-term trades or mere settlement or clearing activity.

3) Operations, systems, and processing risks, which include risks arising from executing trades, doing money transfers, collecting and sending out data, processing and clearing securities, accepting and holding collateral, and systems glitches.

4) Documentation, regulatory and compliance risks, which include all risks tied to legal and regulatory issues and the documentation behind all business activity.

5) Reputation risks, which was popularly added to the lists of risk management's responsibilities the past decade and includes reputation issues that arise from doing business with questionable clients or in certain areas around the world or doing business in a questionable way.

6) Country and political risks, which include risks in conducting businesses in certain countries and geographic regions.

7) Collateral risks, which include risks of accepting certain types of collateral in transactions (including securities, cash, and hard assets) and risks that the collateral is under-valued or not transferable in certain cases.

Risk-management units juggle all of these responsibilities, try as hard as they can to grasp, scope and quantify these risks, do all they can to project and anticipate worst cases, and are expected to have a plan for how to manage and reduce them. Miracle workers, some say, who must also have a solution, a game plan, an alternative, or simply a way out.

Over the past two decades from Drexel Burnham to Washington Mutual, we've seen it all, or always thought we saw it all, until the next shocking loss by another big institution.  But through it all, while fingers pointed directly to risk managers, the role of risk management always emerged as important as ever.

Tracy Williams

See also CFN: Dimon and Bank Regulation, May 2012

CFN:  Risk Management: Opportunities in 2012

CFN:  Risk Management and MF Global's Demise, 2011 








Thursday, May 17, 2012

Consortium OP 2012: Getting Psyched!

Hundreds of new Consortium MBA students--beaming with glee and pride after having been accepted by top business schools and, in many cases, after having received full-tuition fellowships--will converge on Minneapolis for the Consortium's annual Orientation Program. They don't go alone.  Hundreds of others, including Consortium alumni, business-school staffers and professors, industry speakers, and corporate recruiters will touch down in Minneapolis, too, and participate in panels, discussions, networks, and career fairs and welcome over 300 new Consortium MBA students to the b-school experience.

The OP, as it has evolved over the past four decades, is more than a celebration of admission.  Programs exist for alumni of all years and experiences.  This year even includes a day-long examination of the consulting industry for those interested in a career in consulting.

The panels, events, and presentations help students gear up for b-school, recruiting, coursework, specific subjects, casework and career decision-making. September looms and all that comes with it (new campuses, new environment, new classmates, challenging courses and swamping workloads) follows behind. The transition from workplace to campus starts now, and the Consortium OP makes sure students are ready. (This year marks the Consortium's 46th annual OP.)

Students and alumni who attend should maximize what they get from the OP.  What a waste it would be if they shrug it off as a short respite away from current work, a brief chance to take a breather before preparing for the move to Darden, Tuck, Marshall or Haas.  This is the time to leap at a gift given--an extraordinary networking event with opportunities to outline what you want most from business school and learn a little something in the process. 

How can MBA students and alumni optimize the week? Many come with an agenda; many come with hopes, while some come crossing their fingers wishing for luck to meet the right corporate representative with arms full of folders and booklets describing real job opportunities.

Consortium students and alumni can make the best of the week, and in years past, many have done so dutifully. They attend the sessions, luncheons, panels and corporate events, even resisting the temptation to sneak away to tour the town or loiter about in local bars.  What can this year's batch do?

1.  Pace yourself, organize your time, and acknowledge that with an onslaught of events, programs and panels, you can't do it all. But if you have a plan, stick to it, and allow for free time, you can do, see, and meet what you design on your agenda.

2. Absorb the knowledge; listen out for and welcome the wisdom shared by experienced alumni, corporate representatives, business professionals, professors and business-school deans.  The talent, wealthy experiences, corporate skills, and intellectual breadth concentrated at the OP are enormous.  Allow as much of that to rub off as possible.

At OP, there are flurries of information, knowledge, and insight that are passed around and shuffled about--during panels, during coffee breaks and dinners, even on elevator rides or during idle chats around the hotel fountain.  Gatherings as big as a hundred or as small as a couple discuss companies, business trends, schools, cities, hot opportunities, financial innovation, marketing ideas, and the prospects of start-ups. They discuss favorite cities, attractive regions and countries (hot spots), and desirable entry-level positions in marketing at a Fortune 500 company.  They discuss how they plan to start their own businesses or non-profits. 


3. Be open-minded: explore other industries.  Go beyond your comfort zone and sample something new. If you approach school stubbornly focused on private banking, step beyond familiar waters and learn something about micro-finance, private equity, community banking or municipal finance.  If you are preparing to concentrate in finance, do something daring and attend a panel on entrepreneurship, industrial management or international business.

Allow yourself a moment of serendipity--being lucky to have been in the right place in the right time because you dared to try something new.

 4. Get to know the companies that swarm the OP, that send dozens of representatives ready to discuss all aspects of their businesses, strategies, expansion and even recruiting. Get a sense of the companies' cultures, people, and management style. Decide whether these are places where you wish to start out (or perhaps invest in or do business with in the future).

At OP, there are many chances to confer with companies, banks, institutions, and other organizations--during receptions, at lunch, during dinner, in the lobby, or at panels. At OP, corporate representatives come yearning to start a relationship or have dialogue with a Consortium student or alumnus.


5.  Make connections beyond your school. Very quickly you will get to know all other Consortium students from your school. The meaningful, rich relationships with classmates will ignite and spark at the start.  Nonetheless, find time to connect with and meet other students and alumni from other schools.  If you are from Olin, Tepper, Darden or Johnson, steal away to meet those from McCombs, Ross, Tuck, Goizueta, or Stern.

Discuss shared experiences and backgrounds; talk about business-related dreams, and devise strategies for how you all will pursue ambitions.  You will have extended your network from the confines of your school to a national tie-in.  When you return to school, you should have campus connections and ongoing communications with students from campuses coast to coast.

6.  Don't ignore professors and staffers who take the time to attend OP. Sometimes they are overlooked, as students and alumni rush to make connections with corporate representatives or stumble to get to corporate-fair presentations from favorite institutions. 

Professors and staffers in attendance from all schools provide advice on how to approach required courses, how to plan a concentration, how to plan a semester abroad, and how to juggle academics while looking for a summer internship. And you get their attention and thoughtful commentary when they are not preoccupied with other campus chores.  There, too, is no rule that says a student or alumnus from Anderson or Stern cannot speak to an official from Yale, Tuck, Kelley, or Wisconsin.

7.  Take a moment to discover the city. Time won't permit you to do this in chunks, but force yourself to allot an hour or two here and there. Minneapolis will put on a happy, welcoming face and will be eager to share with you its cultural offerings and geographic wonders.  It wants you (and the Consortium) to return for business and personal purposes.

8.  Most of all, enjoy the moment. The OP has a celebratory air with many pats on the back,  inspiration from speakers, and encouragement from schools, older alumni, and corporate representatives. There is good reason for all participants to applaud each other. The new students, with their MBA acceptances at top schools and lucrative fellowships, have wrapped up a successful chapter one of the MBA experience and can't wait for the rest of the book to evolve.

Tracy Williams

See also

CFN: OP, 2011 and Consortium Alumni

CFN:  OP Through the Years (June 2010)

Thursday, May 10, 2012

When Mentoring Relationships Falter

Something often plagues MBA students and many young professionals in finance. Why don't mentoring relationships always work as they were envisioned or designed? Why do mentoring relationships often get off to exciting, hopeful, ambitious starts, but flicker, whimper and die out? Why do they start with promise and then meander into nowhere?

Not all mentoring relationships, we know, falter.  Some thrive. Some lead to life-long relationships and friendships.  Some lead to opportunities, new jobs, promotions and even new careers, activities, and hobbies.  Note the themes of thriving relationships. They suggest something refreshing, new, opportunistic, and different.

But what about those that falter, the life of which oozes out and dwindles to nothing?

What happens when the eager first-year MBA student at Virginia, Emory or Berkeley links up with a principal at a private-equity firm. They meet, greet, exchange business cards and discuss respective backgrounds. They deduce they have much in common--shared backgrounds, shared acquaintances, and shared interests in finance.

There is an intersection, where they bond and which spawns "a relationship."  Because of the bond, the mentor offers an insider's list of suggestions for how the Emory MBA can pursue a career in private equity or venture capital. The mentor visualizes happily the student following in her path. The student expresses his good fortune; he has found the toolkit or treasurer's chest that can lead him to an associate position at Blackstone, Goldman Sachs, Jefferies, Citadel, Kleiner Perkins or Morgan Stanley.

They go their separate ways, exchange e-mail messages of gratitude, arrange a follow-up phone conference call, and then meet for coffee in New York weeks later. All of a sudden, the student detects diminished enthusiasm from the mentor. The mentor, distracted by other worries and pressing demands, is not attentive and even forgets some personal details about the student. The student stumbles, uncertain in how to respond, how to take advantage of the moment, how to push the relationship along, or how to seize the day.

Worse of all, the student hesitates afterward to reach out again to the mentor.  Or (in some cases) the mentor, noticing how unprepared or clumsy the student seemed to have been, is suddenly less interested in "grabbing a cup of coffee" the next time he is in New York.  

Dozens of reasons exist for why some relationships don't work. Time pressures loom large. Students, young professionals, and experienced leaders in the industry all have deadlines, immediate priorities, meetings to attend, and projects to complete.  The values and promises of a mentoring relationship suddenly appear too vague when the student has final exams and the mentor has a billion-dollar deal to execute. Inevitably, the relationship slips to a spot near the bottom of the priority list.

Other times, relationships falter because the student or young professional expects too much too quickly, having planned to exploit the relationship to achieve a concrete objective.  He pursues the relationship because he wants a job, a promotion, a raise, or a transition to a new group. When he realizes the relationship may not lead to quick benefits, no matter how engaged, connected or powerful the mentor is, he loses interest and eagerness. He is less likely to maintain touch, less likely to call or send the occasional e-mail greeting.

The relationship loses its buzz, its special bond, because specific objectives aren't being accomplished. These relationships falter because they are pegged too often to personal objectives.

The best relationships, experienced mentors say, are those where the relationship proceeds on a natural course. Both sides, because they are comfortable, share experiences, opinions, and histories. Both sides, because they are comfortable, offer constructive feedback and enjoy the give and take of fun, fruitful conversation. 

In finance, mentoring relationships continue to be critical--especially in certain industry segments. To get hired in or to advance in private equity, venture capital, hedge funds and boutique investment banking, relationships and ties to experienced people often count more than formal recruiting processes.

Some mentors, of course, are more active, more interested in the relationship, and more successful at it than others. The onus, however, continues to fall on the younger professional to launch the ties, to cultivate and to maintain them. Some mentors complain that students and entry-level professionals make it complex when they often approach them unprepared, always seeking quick solutions and answers.

Still, some mentors know relationships thrive, even when the student isn't always prepared when they meet, partly because the two understand the motives, interests, dreams and styles of each other. Many relationships indeed have concrete benefits, even if they are reached years later. A mentor can provide guidance to a student, who uses it years later as an associate making presentations to clients, handling the pressure of long work hours, or being promoted to Vice President.

CFN, over the past three years, has explored mentoring relationships in finance frequently. Based on experiences from mentors, students and entry-level professionals, the posts below share success stories and provide some guidelines on how to sustain relationships, how to keep conversations and sessions relevant, and vibrant, and how relationships eventually lead to wonderful benefits.

A few relationships will inevitably fall flat, but they don't always have to.

Tracy Williams


See also:

How Mentors Can Help MBA Students

How Mentors Are Invaluable in Recruiting 

Mentors:  Still Critical, Useful, Important

How Affinity Groups Help in Mentoring


Wednesday, May 2, 2012

JPMorgan's Dimon: A Regulatory Rant

Finance professionals strive to keep up to date with markets, trends and rules. They have a check-list of reading material, journals and documents they refer to from time to time. They scan the Wall Street Journal, Financial Times or BusinessWeek whenever they can. They peek at investment magazines and websites when they think they must.  They peruse SEC documents, accounting rulings, equity research, and analyses from ratings agencies.

Each spring, they find time to read Warren Buffet's annual letter to shareholders--often a primer in investment basics, occasionally a skillful interpretation of finance trends or opportunities.

Or if finance professionals are wedded to trends and fashions in financial services, they tune to JPMorgan Chase's Jamie Dimon and his state-of-the-industry message in the annual shareholders letter.  Since he took the helm as CEO in the mid-2000s, Dimon has used this forum to present more than an analysis of revenues and profits.  Dimon takes the podium and delivers an op-ed piece that roars for dozens of pages.

At the pulpit, aware his audience ranges from investors and hedge-fund managers to regulators, analysts, students and perhaps a politician or two, he selects the important financial issues of the season. He rattles and shakes those issues and explains them in easy-to-understand patterns and data points.  After a neat, digestible presentation of the facts (and his interpretation of them), he delivers knock-out punches:  his views of what happened or is happening, his opinions of what everybody needs to do going forward (including himself, employees, communities, investors and governments), and his promise what his institution will do in the years to come (and of course why all that will help the stock price of JPMC.)

In years past, he was brave to tackle and offer a CEO's candid view of the brewing and bubbling over of mortgage markets, the darkest days of the financial crisis, and the public's perception of bankers being over-compensated.  This year, his letter addresses what is plaguing most large financial institutions these days--new financial regulation banks must comply with over the next decade. The 2012 letter, in part, is a treatise on bank regulation. There is much about this onslaught of regulation that bothers him.

JPMorgan, Dimon writes in his letter, has 14,000 new rules to review, understand and adhere to.  They include U.S.-based Dodd-Frank regulation, the international requirements of Basel II and III, consumer-related regulation, and the Volcker rule that prohibits proprietary trading and will change the pulse, pace and perhaps earnings trends of large banks.  They also include, Dimon explains, requirements of big banks to prepare "living wills" and complex capital-adequacy stress tests. Dimon doesn't disagree with the spirit of regulation. But he fumes at the extraordinary burden of complying with arcane, nebulous rules being thrust on his bank's plate right now. There must certainly be a simpler way, he asserts.

He disagrees with the inefficiencies of dozens of regulators around the world imposing overlapping rules, often without regard to consequences. He's angry that his institution will need to prepare liquidity reports--not just one liquidity report for all regulators, but five liquidity reports for five regulators.

Dimon claims new bank regulation at JPMorgan Chase will require significant amounts of time from 3,000 designated employees and will cost about $3 billion to implement, gather data, perform calculations, monitor exposures and assets, set up new systems, prepare and submit reports. To him, that would be thousands of hours of employee-power not devoted to the business of generating banking revenues. 

As always, after his well-reasoned, often well-articulated griping session, he offers solutions, although this time he knows his solutions and recommendations come too late. Or they will land on ears of government officials not likely to be sensitive to what will appear to be big banks whining about being required to clean up the messes from the crisis.  "The frustration with and hostility toward our industry continues," he writes. "Regulation has become politicized," he says later.

He would settle for, in a dream world, for the opportunity to prepare one simple report for as few regulators as possible--and perhaps a couple thousand fewer employees dedicated to monitoring rules and preparing reports. 

New regulation is intended to minimize the recurrence of a financial crisis, eliminate possibilities of a collapse of the financial system, and reduce the probability that the downfall of one big bank will be a detriment to all institutions globally.  So all bank leaders deal with the fact that regulation--for good or bad--may reduce profit opportunities and lower returns on capital.  Dimon, in his letter, accepts this premise and shows how his institution will overcome hurdles to achieve stable, consistent returns. In fact, he spends a page or two explaining how the investment bank, no longer blessed with the ability to bolster returns from the fortunes of prop-trading, will remain relevant, profitable and at the top of league tables. "Market-making"-related trading will still generate substantial revenues.

In 2012, Dimon vented. He knew he had the stage, a wide audience of stakeholders who understand his business, and also had several uninterrupted pages in the front of the annual report.  He knew his voice wouldn't be misinterpreted in CNBC soundbites or ignored by parts of the population uninterested in the views of big-bank CEOs.

For those passionate about a bank's legal, compliance and regulatory requirements, there is a reason to cheer the decade to come. Dimon's letter suggests there will be long-term employment security for those immersed in regulatory reporting and the black boxes that used to look for prop-trading opportunities, but now must be used to prepare five liquidity reports for five regulators.

Tracy Williams

See also

CFN:  Dimon's State of the Industry, 2011

Tuesday, May 1, 2012

How To Evaluate Auto Insurance Quotes Online

Shopping on the World Wide Web has become a common practice in today's times. Since most people have some sort of daily access to the internet, they can do a lot of purchasing on the Web without actually having to go to a business location. When comparing quotes from different companies online, there are some standard procedures shoppers should follow before making a final purchase.

In order to get the best coverage for the least amount of money, one will need to shop around. Compare prices of at least three vehicle coverage companies. There are even internet sites that will show estimated prices of ten or more policy providers all at one time. This gives the buyer a chance to review costs of multiple providers quickly and without having to go through the trouble of calling each one.

A person should always know what they are buying. Read the fine print and details about policy before purchasing. Be aware of what is covered and how much it is covered for. Pay attention to procedures for filing claims and receiving payouts.

                                            Auto Insurance Quotes images

Another important aspect of buying on the internet is to evaluate the customer support system of a company. This is particularly true if the company is strictly web based. Customers should be able to get a hold of a representative 24 hours a day seven days a week. Car accidents happen at all times of the day and night and when they do, drivers should be able to reach their vehicle coverage company.

Examining auto insurance quotes online means that buyers will need to evaluate a few important aspects. Always get price estimates from at least three providers and know the details about policy specifics. It's imperative that internet vehicle policy shoppers select a company that has a strong customer support system in place. A live representative should be available to customers at all times.

OnlineAutoInsurance.com brings free, fast, unbiased auto insurance quote comparisonsto consumers and helps people save the hassle of getting quotes individually without requiring any personal information or lengthy procedures to find cheap car insurance rates.