Question of the week.

Now that federal and state regulators have put "big business" under the microscope, many firms devising strategies to avoid being the next financial entity plastered across the headlines. With the recent addition of former U.S. Senator Phil Gramm to the staff of Wall Street firm UBS Warburg to advise clients on corporate finance issues and strategies, this maybe the road that many other institutions take as well. Having a former government official on board can not only help to protect against reforms, but it can also inside knowledge, about government policies. This week IMW asks the market:
Experts predict that many money management firms will begin incorporating former lawmakers as staff members. Do you think that this will become a trend as the markets move into a more regulated environment?
Mark Elzweig, president, LTD, a money management recruiting firm
The recent trend that we're seeing is that in a difficult market, people are especially concerned on how to position themselves from a marketing standpoint. When you hire well-connected politicians, it can afford a firm not only high visibility but a pool of assets. The assets can be public money, union money and also high-net-worth money from campaign contributions. That is one of the reasons that has happened. What we're seeing in terms of search activity is a focus on strategic planning and appropriately positioning the firm. There is less search activity by people in the field selling, but there is an increase in these searches. This is a difficult time to develop new business in this market. People are focusing on how they can better position themselves from a mark standpoint. That is where the appropriate political hire can be a strategic move.
Professional At An Executive Search Firm
My understanding is that historically, the brokerage industry has done this for quite some time. In the investment management industry, the largest enterprises have taken to bringing on high profile officials who are leaving politics temporarily or permanently. If it is permanent, they want them on board for contacts or to generate new business. For those who are making stop gap, its sort of a an investment on the investment management part to have a friend of the firm for new business develop and legislative development. In either case, it is to their advantage to have a relationship with these politicians. From a regulation standpoint, I think it's a question of helping to frame those regulations and who can make a call and lead them in the right way. You want to have people on your team who know the routine and can get someone to take their calls and return their calls.
Jeff Vivian, senior vice president CDC IXIS Asset Managment Associates
Are we headed toward a more regulated environment? I would say we are entering an environment of increasing enforcement of existing regulations. As for public policy makers transitioning to the private sector, I would ask this question: Will former legislators influence change in business practices of their new employers to better ethically serve clients of that financial institution?