Father and Son Investment Bankers Describe Wall Street Regrets
(Bloomberg Markets) --
This Bloomberg Markets article is part of “The Only One in the Room,” an oral history of the Black experience on Wall Street.
When W. Don Cornwell joined Goldman Sachs & Co.’s investment banking department in 1971, he was a pioneer for Black men on Wall Street. When he left in 1988 to found Granite Broadcasting Corp., he saw a growing pipeline of people of color. Today, at 72, he serves on the boards of American International Group, Natura & Co., and is preparing to step off the board of Pfizer. He says he’s “incredibly disappointed” with Wall Street’s lack of diversity.
His son, K. Don Cornwell, 49, worked as a consultant at McKinsey & Co. and in corporate development for the National Football League before following his parents to Wall Street. After an 18-year career at Morgan Stanley, where he became head of global sports investment banking, he joined PJT Partners Inc. as a partner in 2015. Like his father, he says he’s been disappointed that Black men and women remain so rare on Wall Street.
They spoke with Bloomberg Markets about their experiences and proposed some solutions. The interviews were conducted separately. Their comments have been combined and edited for length and clarity.
W. Don Cornwell: Going to Wall Street was really an outgrowth of wanting to start a business, and I knew that Wall Street would teach me how to raise capital, which was essential. Having ended up at Harvard Business School, I decided to take the investment banking course. I was approached by a professor, Sam Hayes, who suggested that I think about investment banking as a field. That’s how I actually came to be introduced to Goldman Sachs.
I’m pretty sure I was the first African American that they hired into the investment banking area. I learned about a year after I joined the firm that Goldman had been sued for hiring discrimination by an African-American student at Stanford, an MBA student. About a year after I joined he reached out to me. He wanted to make sure I knew what had happened. And, in the same period, the hiring partner at Goldman also reached out to me. He wanted to tell me what had happened. Interestingly enough, both individuals pretty much had the same story. The facts weren’t really in dispute. It was not a good or lawful interview, I think is the best way to put it, that this young man had with the hiring partner.
I’m very grateful to that student for having the courage to call out an act of discrimination. It frankly probably cost him any opportunity to work on Wall Street, which he presumably wanted, and it likely got me my opportunity, even though I didn’t know it when I got hired. I don’t think it was an accident I got hired. I think that they were aggressively looking to recruit persons or a person of color and I happened to be by pure happenstance in a class with a respected professor of investment banking who thought I had the capacity to do the job.
K. Don Cornwell: Both of my parents were in finance so it was something that was around my household growing up, with my dad being an investment banker and mom being in fixed income. I got to college and started spending my summers working as an intern at Goldman Sachs. I was a big math person so I thought finance was a real career possibility.
When my mom and dad were on Wall Street they were pioneers, but by the time I got to Morgan Stanley in 1998 there were actually quite a few Black people I could look to as role models. There were a decent number of Black professionals who were in the prime of their careers that seemed to be thriving. I just assumed that things would continue to get better, but that didn’t happen. I think back to my associate class coming in—not just at Morgan Stanley, but across Wall Street—and there were a number of people of color. However, we are not experiencing the same numbers these days. The Black bankers that started on Wall Street around my time period and thereafter have not stayed around. Thus, you don’t have as robust a group of senior Black people on the Street compared to when I started in 1998.
W. Don: I was 23 when I joined Goldman Sachs and was too young and inexperienced to realize that when you join a firm you need to have someone who really wants to help you succeed—to be invested in your success. I’ll be blunt, I didn’t have that. So I kept my head down. I worked hard within the firm.
Almost by accident I finally got what I would describe as a sponsor, a mentor, you know, call it whatever you want. I got a boss who was personally invested in my professional development and in my career, his name was Peter Sacerdote. He became the head of the corporate finance department when I was by coincidence about to leave the firm because I had become a co-single parent of my son. His mother and I believed in sharing parenting as we were going our separate ways and I knew that was going to change my ability to be a typical investment banker. Peter asked me to consider taking a managerial role, which he thought would help him a lot but would also provide me with much greater scheduling flexibility. So I took the job.
And what really struck me was that Peter immediately began to treat me like someone he wanted to succeed. He gave me a lot of great advice, he talked with me candidly about the fact that I was essentially taking myself off the path likely to lead to a partnership. In those days you really needed to be in a client-facing role. He explained to me that I should keep the ability to stay in the client-facing part of the world so he structured something which allowed me to do both.
When I left in 1988, I wasn’t a partner but I had a lot of responsibility, including the authority to do consequential things such as in hiring. And when I walked out the door there were a decent number of young African Americans who had been recruited into the firm on my watch in different parts of investment banking who I thought should have a shot at having constructive and rewarding careers at the firm. As I looked back later, I realized that virtually all of them were gone and it really brought home to me that unless you do something that is either structural or intentional, you’re just going to keep getting the same results. I had good relationships with many of my peers at Goldman as I left the firm but I fault them for not having done more to build a diverse talent pipeline. I also fault myself, let’s be candid—maybe I could have been even more active and impactful during my years when I was a part of managing the corporate finance department.
Success in a firm like Goldman Sachs is a function of talent as well as having the best opportunities for client and internal exposure. I did OK with clients. It is the internal assumptions which can really be devastating. The only partner in my area of the firm who nurtured my development was, ironically, the hiring partner mentioned earlier. I was almost never assigned to a company based in Texas, Georgia—the South—and Goldman had many clients in those states. I think that there was an implied assumption that clients might not be accepting of an African American, and so therefore I didn’t go to any of those places. Which basically meant I was not in a position to get as much exposure to key clients or frankly to key decision makers in the firm.
K. Don: The staffing process is a place where all sorts of bias can creep in. Whether somebody is deemed to be highly sought after generally has to do with their talent in terms of their investment banker skills, but a lot of it is “fit.” What we have seen over the years is that people of color have really lost out during the staffing process. They are not getting premium projects, which can negatively impact how people perceive their talent level.
When you look at African-American managing directors on Wall Street the vast majority have come from product groups—capital markets, sales and trading, and M&A. You very rarely see any who have made it up through the system in a coverage area. Why? My theory is that there can be bias in how clients pick their banker and generally clients make decisions based on their relationship with their coverage banker.
Clients constantly have coverage bankers coming through pitching their services and sometimes they are hard to differentiate. Let’s say one grew up in the client’s home town, has kids at the same school or is a member of the same golf club, while another may be equally talented, but doesn’t share the social ties. In a jump ball, the guy who has those ties has a significant edge. Given the make-up of the C-suites of corporate America, a Black banker is less likely to share those social ties.
One thing I always joke about is that working in the sports world I have the advantage that when I walk into a room with a team owner, I’m generally not the first person of color they have done real business with. They deal with Black players and agents all of the time so they are very comfortable doing business with somebody of color. That’s not necessarily the case in most industries.
When a talented person of color shows up at an investment bank, we need to make sure they are put in a position where they can succeed. This means being thoughtful about their staffing, group placement and industry focus. If we don’t focus on this, it will be really difficult to see any meaningful change.
People tend to assume that I do sports and gaming work just because I love sports and gaming, and part of that is true. There’s no question that I’m a huge sports fan and I really do enjoy my industries. Given my NFL background, I’ve got relevant experience and a good network. But the fact of the matter is, I ended up in sports due to a lack of other great focus area opportunities.
I sat in the M&A group of Morgan Stanley and for my associate years I got to work on great things with great people. In my early vice president years I stopped getting premier staffings so I had to get entrepreneurial. The business of sports was something that was becoming more relevant to Wall Street and I knew that I had a unique network and set of experiences. I made the decision to make that a bigger part of my portfolio. It wasn’t as if there was a sports groups at Morgan Stanley that I joined, I just created it. I did it because I wasn’t getting put on the best accounts and projects and there were people who had the same skillset that were getting better projects to work on. While it was unfair, it was the best thing that ever happened because I put myself in a position where I get to work on things that I really love and enjoy.
W. Don: I’m incredibly disappointed with where Wall Street is today. As a proud father I can say that I think my son is a star banker, but he’s relatively lonely as an African American in his field, which I think is sad.
Creating successful African-American professionals is only going to happen if it’s intentional and it’s from the top. Firms and corporations set performance measures for top management and should meaningfully incorporate diversity in those measures as advancement, pay, and rewards are determined. Boards and CEO’s have to measure management’s success in developing people and insist on investment in talent to achieve excellent outcomes. People respect what you inspect. If [Goldman Sachs Chairman and Chief Executive Officer] David Solomon can tell the world Goldman Sachs won’t take a company public without gender diversity on the board, he can say the same thing about ethnic diversity and make it happen.
And quite frankly, if the Goldmans, and Morgans and JPMorgans are serious, they would expect their vendors to respect those values as well. If a firm values diversity, then I see no reason why its law firms and accountants and consultants can’t annually provide a report on their diversity pipeline and outcomes. There are major companies that do that and vendors do pay attention and make progress—especially when it is important to clients.
K. Don: If you hire somebody of color that you think is going to be a star, you need to invest the time and effort to make sure that they are getting a fair shake. Because over the last 50 years there has not been a fair shake.
Beyond the staffing issue I mentioned, here is another way this impacted me: Often in my early days as a banker, I would get a comment in my reviews that would say, “We’d like to see Don be more aggressive in meetings with clients and, you know, raise his voice more and show a higher level of excitement.” Year after year I would get that comment. One of my mentors told me to forget about it because the last thing your colleagues want is for a 6-foot, 5-inch Black guy to go into a conference room meeting and start screaming and yelling—they might end up calling security! He was kidding but there was some truth to it.
What I don’t think the people who wrote those comments were thinking about is that every day I walk into a room, I’ve got to think about how my physical appearance makes people feel. People talk about the “Black tax”—for me the Black tax at the office is the time I have to spend thinking about how people are going to react to my appearance. It’s the time that I have to spend dealing with all of the various issues around the potential for bias—looking for it, trying to avoid it or addressing it when I see it, especially as I’ve gotten more senior.
I talk to junior Black investment bankers at a lot of different firms. They can hopefully learn from what I’ve gone through and frankly what people before me went through. I think about my parents, and what they had to deal with in the ‘70s and ‘80s. Compared to them, I’ve got it easy. I can’t imagine my mother being on a bond desk in the late ‘70s on Wall Street as a Black woman. She was tough as nails and she dealt with all sorts of crazy stuff.
I’ve come across very few people in my career who I actually think are blatant racists. There’s just so many people who are naïve. One of the questions I like to ask people—especially over the past couple of months when people come to talk to me about the topic of racial equality—is: “How many Black people do you have in your cell phone other than just because your corporate directory has Black people in it? Who do you speak to on a day-to-day basis who’s Black? Most likely you went to school and worked with Black people—how is it possible you didn’t make friends with any of them?” Reflecting on that is a good start to making some progress.
The leaders of Wall Street firms have to hold people accountable, and the way they can be held accountable is financially. If you want a banker to act a different way, you impact their compensation. What we can’t have is a world where a high-producing banker who contributes to racial bias gets paid the same as a high-producing banker who doesn’t. Organizations have to look around to find where they think there might be issues of bias and get rid of it. Review and re-evaluate every single process they have even though there may be some that are “tradition.” If the retention issue is solved, then you’ll see more senior Black bankers—and hopefully we create a wonderful virtuous circle where new entrants have an easier time rising through the ranks.
Tan covers finance for Bloomberg News in New York.
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