Q&A with

John Beckelman

I grew up in Staten Island, NY and attended excellent public schools there. There were a lot of ethnic neighborhoods that brought diversity at that time to Staten Island - it was a great place to grow up. Although I had no familiarity or relationships on Wall Street I always had an intuitive drive that made me feel like I could do well there. I attended St. Johns University in both Staten Island and Queens and got my first job at Dunn and Bradstreet as a credit analyst. Although it wasn’t what I wanted, I needed to earn a paycheck as I sought to get my foot in the door of a Wall Street firm. My first real opportunity came when I took a job as an accounting analyst at Salomon Brothers during its heyday. The job did provide a lot exposure to Salomon’s business lines and I was thinking that I might network my way into a sales or trading role since I now thought that was my calling. That did not work out as I’d hoped. My “big break” came when I spoke with a fellow express bus commuter, Dick Libretti, on a bus stop headed into work one day from Staten Island. It turned out he was a Partner in a Primary Dealer firm called L.F. Rothschild that was just starting a Sales & Trading training program. He thought enough of me to submit my resume for a series of interviews and I ended up getting accepted to the program. I remember having to take a significant cut in pay in exchange for the opportunity, I had just gotten married at the time. At the end of the program, I was placed in the Bank Service Department within the Fixed Income Division, the first “FIG” group of its kind that I am aware of, and set out calling on Financial Institutions across the country. In 1988 the firm went bankrupt in the stock market crash and a few of us left for a brief stint at a firm called Tucker Anthony to try to construct a similar group. When that didn’t work out Dick Libretti and I left to join his former colleagues Herman Sandler, Tom O’Neill and Jimmy Dunne who had started their own firm called Sandler O’Neill & Partners. Herman, Tom, and Jimmy were also alums of the LF Rothschild Bank Service Department. I was lucky enough to be at Sandler for 29 years, and had been running Fixed Income for several recent years, at the time of our merger with Piper. The merger made sense for both firms as we had begun expanding into other aspects of financial services transactions and Piper needed more of a stronghold in the FIG vertical which we provided.

Piper was, and still is, a Public Finance and Municipal Bond distribution powerhouse. Although we at Sandler were somewhat involved in the municipal space by virtue of our bank client base, it was not a major business of ours. Sandler was primarily a mortgage shop as it pertained to fixed income. Another difference was in the approach to the business. By virtue of its prowess as an originator, Piper was more of a flow and new issue distribution shop while Sandler was very strategy focused taking a holistic approach to fixed income with recommendations coming from a “whole balance sheet” perspective. Sandler fixed income folks worked hand-in-hand with our investment banking partners to bring each client a tailored solution without agenda or predisposition, which was a very successful approach for us. Post integration, our focus has been taking the best aspects of two very complimentary business models and integrating all of our professionals so that we have the best of both worlds to offer our clients. We offer tremendous product origination capabilities in multiple areas, not just municipals, alongside second-to-none analytical firepower to help clients use various products to implement strategies uniquely tailored for them. We’ve spent the first two years cross-training our legacy salesforces into a singular salesforce with a wide breadth of expertise and access to all the firms resources as well as unmatched intellectual capital to help differentiate us from other firms who simply sell bonds.

In both 2020 and 2021 we have done well relative to both our internal projections as well as compared to peers. 2022 will be difficult to project as there is not a lot of clarity as it pertains to ultimate Fed actions and their effect on interest rates. Fixed Income customers of all stripes prefer some degree of clarity when making decisions. The advantage we have is that we still have tremendous upside in both our origination businesses as well as in the continued cross training of our salesforce. We have seen that cross-pollination is bearing very good fruit so far and expect it to continue despite whatever the operating conditions might be. There are always good ideas and strategies to employ in any rate environment and we have a lot of intellectual firepower here in fixed income, and at our firm, to help our revenue producing people bring them to our client base.

Yes. As I mentioned earlier, the two firms had some very different product offerings as well as differing approaches to the business. Legacy Piper fixed income sales folks now have access to things like our fast growing derivatives and hedging business, our very active loan trading platform, and our bourgeoning debt capital markets business to name a few. Legacy Piper folks also now have more unfettered access to working closely with our investment bankers and have the opportunity for revenue attribution in those situations. Legacy Sandler folks now have access to a tremendous Public Finance originations platform for new issue municipal business as well as access to a fully diverse investment banking platform where they can leverage their full “rolodexes”, not just in financials, into increased revenue opportunities as well. We’ve seen numerous situations already where this has happened in both directions which has been a contributor to growth in our investment banking revenue as a firm.

Aside from opportunities, what are your biggest challenges running fixed income at Piper Sandler?.

The biggest challenges running fixed income at Piper Sandler have been two-fold. My approach to working with people has always been one rooted in personal interaction. This was easier at Sandler where we were largely all in one place and saw each other every day when we were not traveling for business. Piper was more spread out across the country which made it a bit more challenging to interact with folks the way I prefer and was accustomed to. Add in the effects of Covid and it became even more challenging. Thankfully, I am back to doing a good bit of traveling and am getting around a lot more than I was able to in the past since the merger. The other challenge, which is the more exciting of the two, is trying to inspire folks to get out of their comfort zones and do something different. It can be very difficult to instill faith in folks to do things they have never done before even when it represents a tremendous opportunity. It takes time to build and engender trust which again was somewhat challenged in the Covid environment. We’ve had some good success by empowering folks from both legacy platforms into leadership positions in Fixed Income and had them, as well as me, try to lead by example. I am still a producer covering accounts and I believe that has helped me to not just “talk the talk” but walk the walk” and show people how it can succeed. I get a lot of great “IB’s” from around the salesforce every time I get a good trade done. My only regret is that we lost a couple of good people post-merger that I didn’t have enough time to help them cross the bridge.

The past is littered with scenarios of demise where firms have tried to buck the tide of technological advancement in just about every field. The only real intelligent alternative is to embrace it and put it to work for you. We continue to invest in technology to help our salespeople differentiate themselves and be better and more efficient at their jobs. We have some terrific folks in Fixed Income with tremendous intellectual capital in this regard providing great content to our team internally as well as to clients. It’s always been true that when one door closes another opens, we will constantly explore technological solutions to help us find the opening door. The other advantage we have is our strategy based approach, our clients deal with us mostly because they like our ideas and they like us. They know they are paying us by doing business and are Ok with that because of the value proposition they get in return from us. People in fixed income who are out there at cusip-driven shops just trying to move bonds around will have more and more difficulty as time moves forward. We will thrive better than most.

I think we have responded largely as most others have. We’ve looked at our different businesses and what is required from a personnel perspective in each and tried to weigh that knowledge alongside the needs of a very diverse employee base. We’ve never been confronted with something like Covid in our lifetimes so it has been challenging to respect the varying degree of opinions and comfort levels that people have while still doing what we know is right for each business line. We have tried to find the right balance between what is best for the business while trying to respect individual concerns as best we can. We are all anxious to have some form of structure and a clear RTO protocol as soon as we can. That has proven elusive as Covid keeps ebbing and flowing with both geographical and societal differentiators at work. Our CEO and Leadership Team have done their best to weigh the good of the many with the rights of the individual to try and navigate and as we know it’s been neither easy or perfect. We, like others, will continue to monitor the conditions and follow the lead of the experts in the field and do what seems best for each of our business lines. Right now, that remains somewhat fluid.

The impact, I think, is actually defined by your question. Our very seasoned professionals with intact relationships have done extremely well and enjoyed a very big “uptick” in their quality of life. As a result, our business on the surface has done remarkably well. The silent impact as you point out, lies in the future of the business and the in-person mentoring that our younger FI people are missing in this environment. A lot of our junior folks are working closely in some shape or form with senior people and we have to strive to see that continue and that we aren’t missing anything there. We are instituting a new Junior Training Program in the Spring and will be involving senior people that will have responsibilities to help train these folks. That will mean being physically present in the various offices when we need them to be. Like most, I hope once the pandemic has passed we can make up good ground with our more junior folks.

We are an incredibly competitive lot at our place, what keeps me up almost every night, as has always been the case, is what piece of business have we missed in the last 24 hours, big or small, and what could we have done to prevent it. If you don’t feel that then you’re probably not in the right business. Thanks so much for your interest in Piper Sandler.