When Vince Iyoriobhe joined Bank of America’s investment banking division as a rookie analyst in 2017, he planned to stay just long enough to gain the experience needed to pursue his dream career in another corner of finance – private equity.
“I knew banking was going to be difficult,” said Iyoriobhe, 26. But his attitude was, “I’ll do this for two years and then do something else.”
The lure of investment banking is waning for the youngest employees.
For decades, investment banking – the job of advising large corporations on their most pressing needs – was one of Wall Street’s most prestigious careers, glorified in the bestsellers of the 1980s by writers such as Tom Wolfe and Michael Lewis. Thousands of young hopefuls competed each year for the chance to begin a career as an analyst with Goldman Sachs, JPMorgan, Salomon Brothers, and other banks.
They welcomed the long hours and grunt work in exchange for the prestige of jobs that eventually made millions. In return, each analyst class provided banks with a reliable pipeline of talent.
But new college graduates are less and less willing to undergo the grueling two-year analyst program, even though the starting salary can reach $ 160,000. This is especially true as careers in engineering and other areas of finance promise better hours and more flexibility. The pandemic, which has forced many to rethink their work-life balance, has only underscored that thinking. Others, like Mr Iyoriobhe – who spent 90 hour weeks at Bank of America and sometimes just went home to shower – are willing to do so for as long as it takes on their résumé. Today he works for a private equity firm.
“It’s like going through a boot camp,” said Ben Chon, a 27-year-old entrepreneur whose YouTube video of quitting his job as a healthcare banker at JPMorgan Chase’s San Francisco office raised more than 100,000 in February has views.
Mr. Chon said he values everything he has learned as an analyst, but added, “You have no control over your lifestyle and work even when you don’t want to.”
The number of applicants for bank analyst programs is difficult to keep track of, but data from business schools, which collects a slightly older cohort of potential financiers, shows a broad decline in interest in investment banking. Last year, the top five US business schools sent an average of 7 percent of graduates from their Master of Business Administration program to full-time investment banking positions, up from 9 percent in 2016. The decline was at the University of Pennsylvania’s Wharton School, where Bankers made up 12 percent of the MBA cohort in 2020, compared with more than a fifth of the class a decade earlier. Harvard only sent 3 percent of its 2020 class.
In a recent Instagram survey on Millennial Career Polls by a former investment banker looking to create a platform to help young professionals find their careers, 79 percent of 139 respondents said that they think banking would be a less desirable career in the future than when they joined it. And in February, 13 Goldman analysts showed their managers a PowerPoint presentation describing brutally long hours and their deteriorating health.
“The sleep deprivation, the treatment by senior bankers, the psychological and physical stress … I was in foster care and that is probably even worse,” said one of the analysts interviewed by name in the presentation.
“The industry isn’t as attractive as it used to be,” says Rob Dicks, a consultant at Accenture who specializes in financial services recruitment. “Employees want a hybrid model, and banks say no,” he said, referring to a combination of in-person and remote work. “The message is: ‘The bank knows best, we have a model for it and you will stick to that model.'”
A culture of overwork
Although top managers at major banks have been talking harshly lately about the need to return employees to the office, many are listening to complaints from their youngest employees. Goldman CEO David Solomon said on a conference call earlier this month that his company will pay more competitively and increase rewards for performance. Goldman is also enforcing its no-work-on-Saturday rule. JPMorgan is introducing technology to automate some aspects of analyst work and recently hired more than 200 additional junior bankers to ease the pressure during a particularly busy year.
A freshman investment banking analyst in New York can make up to $ 160,000 a year, including a bonus, according to estimates by Wall Street Prep, a company that helps training would-be bankers for the industry. But several firms, including Citigroup, Bank of America, JPMorgan, and Barclays, have raised the salaries of young bankers. Credit Suisse paid younger bankers what it internally referred to as “lifestyle bonuses” of $ 20,000.
Jefferies, another investment bank, even offered Peloton bikes, Apple Watches, and other amenities to thank more than 1,100 of its analysts and employees – the next highest – for their hard work during the pandemic. Jefferies employees “got us through the toughest period of our careers,” wrote Rich Handler, the bank’s chairman, and Brian Friedman, its president, in a July 1 letter to employees and customers.
Yet banks tend to cling to a work culture that was fetishized in the 1980s when Wolfe’s “The Bonfire of the Vanities” recalled Wall Street as the home of the “Masters of the Universe.” Young analysts worked around the clock, picking up coffee and meal orders for the team, enduring pointless tasks like filling out trade tickets, and being exposed to swipes and verbal abuse. In return, they have found their feet in one of the most lucrative careers when new products like mortgage-backed bonds and corporate mergers and acquisitions made huge gains.
Some of the biggest hits in banking began during this heyday, including John Waldron, president of Goldman Sachs; Sharon Yeshaya, Morgan Stanley’s new chief financial officer; and Carlos Hernandez, Executive Chair of Investment and Corporate Banking at JPMorgan.
Banks lost much of their appeal after the 2008 financial crisis, when Silicon Valley was just on the rise and private equity firms went from small partnerships to wealth management giants. The newer career options promised potentially faster and bigger payouts, better work hours, high corporate missions, and perks like taking pets to the office. For young graduates, banking analysts seemed too strenuous to be worthwhile, at least in the long term.
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In recent years, recruiters have started for huge private equity firms like Carlyle and Blackstone, who manage billions of dollars for clients and also buy out companies to recruit analysts before they even took up their jobs.
Brian Moynihan, the chairman of the board of directors of Bank of America, said it wasn’t necessarily a bad thing. “They are very talented kids, especially in investment banking,” he told Bloomberg TV this month. “And there are a lot of offers from private equity and other things that we train for our clients, and that’s fine too.”
And there is the attraction of Silicon Valley.
“The tech sector just completely changed the game,” said Jamie Lee, 37, who worked in banking before starting a venture capital firm earlier this year. “The opportunity cost is just too high to stay in a job that doesn’t give you the treatment you want.”
Mr. Lee’s father, JPMorgan banker Jimmy Lee, was one of the most famous players in his field for decades, advising firms like Facebook and General Motors before he died in 2015 in the mid-2000s, his father urged him to avoid analyst programs.
“He said, ‘Honestly, J, from the way I’ve seen we work with these kids, I’m not sure I want this for you,'” recalls Lee.
It’s not just about the money
For many young workers, higher pay may not be enough, for whom the pandemic only highlighted the less palatable aspects of investment banking – even if other careers dangled more appealing guidelines for working from home.
Armen Panossian, an aspiring junior at Rutgers University, is doing an internship in the logistics division of energy company BP and hopes to get a similar full-time position after college. He said the pandemic was part of his motivation to do a more 9-to-5 job that is rooted in finance.
“I think a lot of people have rediscovered the importance of mental health,” said Panossian, 21.
Eden Luvishis, a 20-year-old student of finance, computer science, and math at Stevens Institute of Technology in Hoboken, New Jersey, wants to work in fintech but would consider becoming an engineer at a major bank – a career she does Getting married could be interested in finance with a more predictable way of working.
“I’ve never been so interested in traditional banking jobs,” she says. “For me it was always more on the quantitative side,” that is, roles with quantitative analysis. “I really love math.”
Before graduating from Mount Holyoke College in 2016, Areeba Kamal spent a summer working as a commercial intern dealing with complex bond products in the Midtown Manhattan Tower of Bank of America. She arrived around 8:30 a.m. and often stayed until 10:30 p.m. to learn the intricacies of her product. She sent money to her family in Pakistan.
“When you’re an international student, you realize early on that your two options are finance and technology,” said Ms. Kamal, 29, noting that these areas provide the most pay and help with work visas.
But after that summer in finance, she gravitated toward technology. “I don’t want to work 14-15 hours a day on something that I don’t care about because it costs a ridiculous amount,” said Ms. Kamal. She works for Apple now.
Still, not everyone is in banking. Herby Dieujuste, 25, who worked one summer for JPMorgan’s private bank and was a TD Bank cashier for a while, is studying for one of the required licenses for bankers during an interview for investment banking positions. As a longtime basketball player, he said it wasn’t surprising that the banking industry treats its rookies as dismissively as a sports team – until they prove themselves.
“I want to be somewhere I know I can be for a decade or two, and I’ve always viewed finance as that type of industry,” he said.