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UBS Investment Bank is carving a niche as a client service firm “where everything we do is for the benefit of our clients,” according to president Ken Moelis. “Twenty years ago everybody did that,” Moelis told students during a fireside chat with dean Edward Snyder October 4 at the Hyde Park Center. Although it’s the wrong approach, he said, “Today, the best ideas from some investment banks are being kept inside and not being spread to the clients.”
Moelis questioned the wisdom of why so many firms engage in significant proprietary trading as part of their profits. As a believer in the Chicago model of efficient markets, he said, “It’s very hard for me to believe you can build businesses around proprietary trading. I don’t understand how people expect that an individual can come in and beat the markets continuously. It has affected where we’re going. We don’t own private equity funds. We have moved certain parts of our prop trading out of the investment bank and into asset management.”
Although he considered law school, Moelis eventually was swept up in the investment banking boom of the 1980s. He said he wouldn’t have it any other way today. “I love the job,” Moelis said. “I just think it’s an amazing career. There’s nothing like it. I’ve enjoyed 25 years of it.”
Moelis compared the first few years in the field to completing a physician’s residency at a hospital or studying for a Ph.D. “You have an array of people from whom you can learn how they handle situations and what they do. You can reject certain people’s styles and accept others. You get a broad array of exposure to financial dynamics and people dynamics. Those first few years are the equivalent of a PhD in financial training,” he said.
UBS encourages its new employees to take chances and let their personalities shine through, Moelis said. “If you’re open to it, you’ll learn something new about people every day of the job,” he said. “What I love is that you’re learning it from the thought leaders of the world in finance. Every conversation you have is a verbal and intellectual duel—a test as to whether you’re allowed in the room, whether you are intellectually capable.”
To develop staying power in the industry, Moelis recommends future investment bankers treat every fellow employee with the same dignity as they do top executives. “In the financial world, the thing that stuns me 25 years later is that everybody you meet you’ll see again,” he said. “It is a small world and everything you do goes to build the reputation you’re going to have. Your first year, if you are not a hard worker, 25 years later you’ll be Ken Moelis who did not work hard. If you work hard and you’re ethical, people will call you 25 years later. Be ethical, be honest, and be straightforward. Be who you are. Don’t try to be something you’re not.”
—Phil Rockrohr
