Investment Banking Is Getting Less Popular With Young Professionals

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When Vince Iyoriobhe joined Bank of America’s investment banking division as a rookie analyst in 2017, he planned to stay long enough to gain the experience needed to pursue his dream career entirely in another corner of finance, private equity.

“I knew banking would be difficult,” said Mr Iyoriobhe, 26. But his attitude was: “I’m going to do this for two years and then move on to something else.”

Investment banking is waning for the youngest members of the workforce.

For decades, the job of advising large corporations on their most pressing needs, investment banking was one of Wall Street’s most prestigious careers and was lauded as a bestseller in the 1980s by authors such as Tom Wolfe and Michael Lewis. Each year, thousands of young hopefuls apply for the chance to start careers as analysts at Goldman Sachs, JPMorgan, Salomon Brothers and other banks – entry-level positions that teach aspiring financiers to build financial models and evaluate businesses.

They eventually embraced long hours and grumbling jobs in exchange for the prestige of jobs that paid millions. In turn, each class of analyst provided banks with a reliable line of talent.

But recent college graduates are increasingly reluctant to put themselves on the grueling two-year analyst program, despite starting salaries that can reach $160,000. This is especially true as careers in other parts of the tech and financial world promise better working hours and greater flexibility. The pandemic, which has forced many to reevaluate their work-life balance, has only underscored this thought. Others, like Mr. Iyoriobhe, who spends 90-hour weeks at Bank of America, sometimes going home just to shower, are willing to do this for the minimum amount of time it takes to add it to their resume. He now works in a private equity firm.

“It’s kind of like going into a bootcamp,” said 27-year-old entrepreneur Ben Chon. youtube video JPMorgan Chase’s article, published in February, about leaving his job as a health banker at the San Francisco office, received more than 100,000 views.

Mr. Chon said he appreciated everything he learned as an analyst, but added: “You don’t have control over your lifestyle and you work even if you don’t want to.”

It’s hard to keep track of the number of applicants for banking analyst programs, but business school data that captures the slightly older group of potential financiers shows a sharp decline in interest in investment banking. Last year, the five top-ranked business schools in the U.S. sent an average of 7 percent of business graduates to full-time investment banking roles, up from 9 percent in 2016. The decline was announced at the University of the University. The Wharton School in Pennsylvania, where bankers make up 12 percent of the MBA cohort in 2020, made up more than a fifth of the class a decade ago. Harvard sent only 3 percent of the 2020 class.

Recently on Instagram questionnaire On the “Millennial Career Surveys” page conducted by a former investment banker who wanted to launch a platform to help young professionals advance in their careers, 79 percent of 139 respondents said they think banking will be a less desirable career in the future than before. they participated in it. And in February, 13 analysts at Goldman showed their tops PowerPoint presentation ruthlessly describes their long hours and declining health.

“Insomnia, treatment for senior bankers, mental and physical stress… I’ve been through foster care and that’s probably worse,” one of the anonymous analysts surveyed at the presentation said.

“The industry isn’t as attractive as it used to be,” said Rob Dicks, a consultant specializing in financial services recruitment at Accenture. “Employees want a hybrid model and banks say no,” he said, referring to a combination of face-to-face and remote work. “The message is: ‘The bank knows best, we have a model for doing that and you’re going to fit that model,’” he said.

top executives of the largest banks recently spoke harshly about the need for employees to return to the office, many of which take into account the complaints of their youngest employees. Goldman’s CEO, David Solomon, said this month that his company will pay more competitively and increase performance rewards. Goldman also enforces the no-work rule on Saturday. JPMorgan is rolling out technology to automate some aspects of analysts’ work and recently hired more than 200 additional junior bankers to ease the pressure in a particularly busy year.

The first-year investment banking analyst in New York could make $160,000 a year, including a bonus, according to estimates from Wall Street Prep, which helps aspiring bankers train for the industry. But many firms, including Citigroup, Bank of America, JPMorgan, and Barclays, have increased the salaries of young bankers. Credit Suisse paid younger bankers $20,000 internally, which it describes as “lifestyle bonuses.”

Jefferies, another investment bank, has even offered Peloton bikes, Apple Watches, and other perks to thank its more than 1,100 analysts and partners—the next rank—for their hard work during the pandemic. Jefferies employees “have made us go through the most difficult time in our careers,” the bank’s CEO Rich Handler and chairman Brian Friedman said on July 1. letter staff and customers.

Yet banks tend to succumb to a fetishized work culture in the 1980s, when Mr. Wolfe’s “The Bonfire of the Vanities” referred to Wall Street as the home of the “masters of the universe.” Young analysts worked around the clock, collecting orders for coffee and food for the team, endured mindless tasks like filing trade tickets, and were subjected to pranks and verbal abuse. In turn, they’ve earned a place in one of the most lucrative careers available, when new products such as mortgages and bonds backed by mergers and acquisitions generate huge profits.

John Waldron, president of Goldman Sachs; Sharon Yeshaya, Morgan Stanley’s new chief financial officer; and Carlos Hernandez, chief executive officer of investment and corporate banking at JPMorgan.

After the 2008 financial crisis, just as Silicon Valley took off, banks lost much of their appeal and private equity firms turned from small partnerships to wealth management giants. Newer career options promised benefits such as potentially faster and larger payouts, better hours, higher corporate duties, and taking pets to the office. To young graduates, banking analyst roles seemed too grim to be worth the effort, at least in the long run.

In recent years, recruiters at giant private equity firms like Carlyle and Blackstone, who manage billions of dollars for their clients and also buy companies, have begun to recruit analysts before they even start their jobs.

Brian Moynihan, CEO of Bank of America, said that’s not necessarily a bad thing. “Very talented kids, especially in investment banking,” he said. said Bloomberg TV this month. “And there are lots of offers from private equity and other things for our clients where we train them, and that’s okay too.”

And Silicon Valley has its charm.

“The tech industry has completely changed the game,” said Jamie Lee, 37, who worked in banking before starting a venture capital firm this year. “The opportunity cost is too high to be stuck in a job where you don’t get the treatment you want.”

Mr. Lee’s father, JPMorgan banker Jimmy Lee, was one of the best-known players in his field for decades, consulting for companies like Facebook and General Motors before he died in 2015. In the mid-2000s, his father urged him to avoid analyst programs.

Mr. Lee said, “Honestly, J, I’ve seen how we’ve run these kids, I’m not sure I want that for you.”

For many young workers, where the pandemic has highlighted the less acceptable aspects of investment banking, more compensation may not be enough – even as other careers rock more attractive work-from-home policies.

Armen Panossian, a rising teenager at Rutgers University, is interning in the logistics division of energy company BP and hopes to start a similar full-time position after college. He said the pandemic was part of his motivation to find more 9-to-5 jobs based on finance.

“I think a lot of people have rediscovered the importance of mental health,” said Mr Panossian, 21.

Eden Luvishis, a 20-year-old finance, computer science and math student at the Stevens Institute of Technology in Hoboken, NJ, wants to work in fintech but is considering becoming an engineer at a large bank – a career that could marry him into finance with a more predictable way of working.

“I have never been more interested in traditional banking business,” he said. “For me it was always more of the quantitative side,” meaning roles involving quantitative analysis. “I really like math.”

Before graduating from Mount Holyoke College in 2016, Areeba Kamal worked for one summer at Bank of America’s Midtown Manhattan tower as a trading intern dealing with complex bond products. He arrived around 8:30 in the morning and usually stayed until 22:30, trying to learn the intricacies of his product. He sent money to his family in Pakistan.

“If you’re an international student, you realize early on that your two options are finance and technology,” said 29-year-old Ms Kamal, noting that these fields offer the most salary and assistance on work visas.

But after that summer in finance, he turned to technology. “I don’t want to work 14 to 15 hours a day for something I don’t care about because it pays a ridiculous amount,” Ms Kamal said. He now works for Apple.

Still, not everyone falls for banking. Herby Dieujuste, 25, who worked at JPMorgan’s private bank one summer and was a one-time TD Bank teller, is studying for one of the required licenses to start banking while interviewing for investment banking positions. As a longtime basketball player, he said it’s not surprising that the banking industry treats rookies with contempt as a sports team – until they’ve proven themselves.

“I want to be in a place where I know I can be for ten or twenty years, and I’ve always seen finance as that kind of industry,” he said.



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