What Does It Mean To Be A Client?

At ft.com Frank Partnoy sheds light on the point Jim Gust raised about Goldman Sachs' attitude toward its clients. (We should probably note that Greg Smith was an "executive director," not a board member or managing director, at Goldman.)

There are clients and there are clients, Partnoy writes:

Both Mr Smith and Goldman stretch the word to cover not only true client relationships in which the bank owes a fiduciary duty as an adviser but also pseudo client relationships in which the company is a market maker, trading with counterparties at arm’s length. Goldman’s “muppets” are pseudo clients at most – fellow gamblers around a poker table. Goldman will ensure that the rules of the game are accurately described – the financial equivalent of checking to be sure there are 52 cards in the deck. But it is not obliged to act in a disadvantaged counterparty’s best interests…. 

Muppets are the suckers at the poker table. For them Felix Salmon quotes this warning from Andrew Clavell:

If you claim you do know where the fees are, banks want you as a customer. You  don’t know. Really, you don’t. Hang on, I hear you shouting that you’re actually smarter than that, so you do know. Read carefully: Listen. Buster. You. Don’t. Know.