Money world is simply a rush

BY MARTA STEEMAN

Michelle Smith has been chosen by Pyne Gould Corporation for her depth of experience in a world which most people regard as mysterious, even impenetrable.

"My passion with it is [that] what appears to be complex is in fact not complex. You break it down into its simplistic constituent parts and for me that's the beauty of it."

She is one of two new appointments to the board of Marac Finance to help steer it towards securing a banking licence, after its rescue last year through a huge capital raising by its parent Pyne Gould Corporation.

Investors burned by the collapse of the finance sector in New Zealand will take comfort that she believes in regulation and rules for finance companies.

Smith returned to Christchurch three years ago after working in London for 21 years, first for global accountancy firm Ernst & Young and then global investment banking giant Goldman Sachs. She wanted her two sons, aged 10 and 11, to be close to their grandparents and is starting a career here as a professional director.

"I was actually very surprised when I came back how little investor protection there was here.

"And I think that there needs to be a regulator that has the ability to enforce, do it promptly and be effective at taking corrective action.

"We are part of a global market and we need to adopt the same best practices that are tried and tested elsewhere. We need to watch and learn from what's happening abroad now."

New legislation in New Zealand to ensure financial advisers were competent and qualified was critical. "It's been in place in Europe for a very long time."

After completing a Masters in accounting, a double major in accounting and economics at the University of Canterbury, and qualifying as a chartered accountant in 1985, Smith with her husband headed for the world of international finance.

Her first job in London with Arthur Young, later Ernst & Young, was working in tax and audit of Middle Eastern and European bank clients.

She took a job with Goldman Sachs in 1994 and stayed 13 years.

At Goldman she rose to a senior position where she headed their European fixed income and derivatives business.

"If there is one thing I have learned at Goldman Sachs when you sit around a table with senior people the most senior person at the table will ask very straightforward, very simple and very basic questions to make sure that they understand what the business is."

Goldman is being sued by the United States financial markets watchdog, the Securities and Exchange Commission for fraud. It allegedly misled investors in subprime investments that turned sour with a complex mortgage- backed product known as Abacus, which it sold knowing that it would fail.

Smith has only praise for Goldman. She is not familiar with the details of the deal but says creating such products was part of what the bank did.

So what does she think about accusations of moral bankruptcy levelled at international financial institutions such as Goldman?

She says it is "looking for a scapegoat. It's not as simplistic as that."

Regulatory failure was one of the problems.

"I think there are a lot of banks that are looking at what happened, looking at their systems controls, their risk management, and I think there are a lot of regulators looking at each other as well, looking at themselves and that is probably a good thing."

In the banking and investment industry stress is a given but she loved that.

"It's very rushed. That's the great thing about it. That's what makes it what it is. It's the adrenaline rush. That's what makes people do it and want to be there."

But despite the thrills, "I don't think there is anybody I have met who doesn't worry about the decisions that you make. And I think it would be a very sad day if you had a manager that didn't worry about the decision they made."

She says the big investment banks like Goldman make the environment so attractive that their employees want to be involved. The training was fantastic, the environment collaborative and there was constant feedback on their progress. Few people left Goldman except to quit the industry.

Twelve hour days were not uncommon."It's not an older person's job, that's for sure. I think you probably do get to a point where you probably wouldn't want to do it."

While international finance is not a male preserve anymore -"that's a myth of the 80s and Hollywood" - the ranks of females do thin out further up the echelons.

She has never experienced gender discrimination, she says.

"In Europe in particular and in New York there's a hunt for talent. People aren't looking for white males now. They are looking for talent."

Because she has never worked in Christchurch it has taken time for her to break into professional director circles.

"Maybe it is because it is small you need to be in the networks, to be in the environment to meet people and finding those networks to get into is very hard."

It seemed easier in Wellington.

"It's a different environment. It's more cosmopolitan somehow and people are more open actually and more willing to say why don't you meet so and so, whereas here people want to get to know you a lot more before they let you into their circle.

"It is only now that I think that I feel as though I have made a few good contacts and networks. It has taken three years which is a long time."

She is also a director of Medical Assurance and a trustee of the Christchurch Arts festival and looks forward to more opportunities to use the experience she has gained.

- © Fairfax NZ News