Goldman Sachs is about to tap into a new class of partners

• Goldman Sachs is preparing to name a new class of partners.
• The process is rigorous, but those who make the cut get access to special perks and privileges.
• Here’s a look inside one of Wall Street’s most exclusive clubs.

From next week, several dozen Goldman Sachs employees will receive the honor of a lifetime: to be named a partner of the prestigious Wall Street bank.

Every two years, usually in the first week of November, Goldman promotes its top traders, investment bankers and wealth managers, as well as technology and compliance staff, to its vaunted partnership.

The competition is intense. The reduction requires years of hard work and months of internal lobbying. Only a fraction of Goldman’s roughly 45,000 employees make it into the exclusive club, which has grown smaller under CEO David Solomon. While the total size of the partnership has fluctuated over the years, it has ranged between about 400 and 450 partners from 2020, according to reports.

“It’s the pinnacle of your career,” Paul Argenti, a former Goldman adviser who is now on the faculty of Dartmouth College, told Business Insider. “That’s where you want to be – that’s the top of the ziggurat,” he added. “Everybody’s trying to get there.”

The Goldman partnership dates back to a time when its leaders contributed their own capital to help run the company. The company is now publicly traded, but his partnership still holds sway.

The benefits alone are enough to drool over – like a base salary of about $1 million a year, which can go up multiples when the year-end bonus is factored in.

In the coming months, Citigroup, Morgan Stanley, Bank of America and others will also announce the newest members of their top ranks, who typically carry the title of CEO.

BI spoke with Argenti and a former partner at Goldman to get a look at the process of getting promoted to partnership, from what it takes to make the grade to the perks and privileges that come with the title. They also shed light on what this year’s course might look like and what its structure might say about the 150-year-old bank’s priorities.

“Becoming a partner at Goldman Sachs is a rigorous and competitive process,” Goldman spokesman Tony Fratto said in a statement. “No one outside our firm or the partnership has any insight into the decisions that will be made. If you’ve heard anything, it’s pure speculation.”

Inside the process

The process – known internally as “cross-ruffing” – can take months of verification. Candidates must participate in a series of interviews with partners from divisions other than their own to minimize the potential for bias.

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People who have worked with the candidate are also interviewed. The former partner recalled a senior official who explained: “I know more about you than you know about yourself. I talked to 25 people about you for 50 hours.”

The candidates who get the most support are passed on to the partnership committee, which conducts a new round of evaluations.

“There’s always a fight for the last handful of people,” the former partner said. “There are a lot of seemingly deserving and qualified people who don’t make it.”

Advantages and severity

Goldman partners have a lot of influence internally and can even change the CEO’s position on important directional matters.

“Their ability to set policy and evaluate strategy and influence CEO decision-making is quite profound,” Argenti explained. “It would be quite difficult for the CEO to operate without the consent of the partners.”

Goldman’s partners sit on influential management committees and lead teams that are worth millions or billions of dollars to the bank’s bottom line. They have access to special benefits, including an exclusive bonus fund for partners and opportunities to invest commission-free in the bank’s investment funds.

In the past, they received one-time bonuses that added millions to their already generous annual compensation. They can also help direct the bank’s philanthropic spending through Goldman Sachs Gives, which says the company awarded $2.5 billion to more than 10,000 nonprofit organizations. In addition, there is a dedicated wealth management office to help them keep track of their money.

One of the most notable advantages, however, might just be the doors it can open for Goldman partners.

“Random people will infer characteristics about you – integrity, business acumen, intelligence, teamwork – simply based on the fact that you are or were a Goldman partner,” said a former member of the group who was quoted in the British publication. Financial news in 2020.

Departing partners become members of the bank’s alumni network and can play to be invited to annual dinners in New York and London, the former partner told BI.

“People would lobby” to be there, this person said, adding that “sometimes people who didn’t leave on good terms wouldn’t be invited.” That had been a point of contention under previous administrations, but Solomon sought to change that by opening the tables more widely, the person said.

Reading the tea leaves

The structure of a class can say a lot about the company’s ambitions and goals. This year, industry insiders are predicting a huge number of promotions from the investment banking division.

Last quarterclosing deals contributed to a 45% increase in profits. IB fees, in particular, are up 24% over last year.

“You tend to reward people who perform,” Argenti said, adding that promotions can say a lot about “where the bank’s energy is going.”

Since Solomon took over as CEO in 2018, he has also been reducing the size of the partnership in an attempt to make it more exclusive. In the latest round of partnership promotions, the partner class we only saw 80 new admissionswhich was up slightly from 60 in 2020.

The former investment banker and partner expects to see something between the two this year, citing what appears to be “a large backlog of business“at the company.

One area to watch will be the number of partners from underrepresented groups, as Solomon has made diversity a priority.

Earlier this year, Goldman’s leaders vowed to do better after a Wall Street Journal report raised questions about whether most members of the company were doing enough to help promote female partners.

“Progress has been slow, and we realize we need to do more to accelerate positive change,” wrote the bank’s chief of staff, Russell Horwitz. a memo obtained by BI. “We will continue to focus on our talent development, retention and advancement initiatives.”

People have described becoming a partner at Goldman as an incomparable rush – but the former banker warned that the honor also comes with heightened expectations.

“It’s this amazing achievement for a second and then you exhale and you realize, ‘Shit.’ It’s just the starting line,” this person said. “That’s where your career really begins.”

Are you a Goldman Sachs insider? Contact this reporter. Reed Alexander can be reached by email at [email protected]or Signal encrypted SMS/app at (561) 247-5758.