Some of the best commentaries on working in investment banking come from people who've been in banking themselves before turning an academic lens on the industry in which they cut their teeth. The famous study on overworking junior bankers by American academic and former Goldman Sachs associate Alexandra Michel falls into this category. So too does a new study by an investment banking analyst who spent three years at Morgan Stanley.
Florian Koelliker's dissertation for his doctorate at the Swiss University of St. Gallen has just been made available online and is destined to become a classic of the banker-turned-academic genre. After serving his three years in banking (latterly in the transport and infrastructure team in London), Koelliker quit to work in a private equity team at Allianz and to study his PhD. The subject of his newly published dissertation is, "Generation Y in investment banking," and more particularly why banks can't keep hold of the thousands of young people they hire.
Koelliker's analysis is as comprehensive as might be expected from someone who passed all three CFA exams within three years and who graduated Cum Laude with 110/110 from Milan's Bocconi University. He spoke in depth to 15 people born between 1981-1996 working at major banks in Frankfurt, Zurich and London, and asked them what was wrong - and what was right - with their careers.
Below is a summary of their responses. They were provided in German and have been translated.
No one starts out wanting to become an investment banker
Investment banking isn't the sort of career you're passionate about from an early age, but is rather a, "rational weighing of advantages and disadvantages," says Koelliker. Most of those who go into the industry will therefore have thought very carefully what they want to get out of it.
Young people are seduced by the big money and the sharp suits
This doesn't mean that decisions to go into banking are entirely devoid of sentiment. One junior bankers told Koelliker that when bankers appeared on his campus in their expensive suits, he had the impression that they were, "something special" compared to people in other "normal" professions. Another said he was struck by the smartness and eloquence of bankers on TV.
While the pay in banking wasn't everything, most of Koelliker's interviewees - unsurprisingly - said it counted for a lot. "I wouldn't do this for €30k a year," reflected one respondent. "The goal for me is to earn as much as I can as quickly as possible."
Another said he'd been impressed by claims that in banking your salary doubles every three years. "If you start with four times the salary [of anyone else], you also say "Wow", you're a wealthy person relatively early on."
The hours are harsh and senior bankers can be rude
When you're an intern in an investment banking division (IBD) nowadays, you're treated gently. Respondents told Koelliker the hours for interns are typically 9am to no later than 10pm at night, after which interns are compelled to go back home.
Once you join a bank as a full time analyst, however, the hours can become "inhuman." One interviewee said he generally starts between 9.30 and 10am and that if he leaves at 11pm or midnight, that's early. Leaving at 2am is "ok"; leaving at 4am is "late" and there are nights he works all the way through.
Alongside the punitive hours, interviewees said some senior bankers can be "quick-tempered and abusive. ” One cited a senior British banker who is very formal and barely swears, comparing him to an American who, "curses and often also likes to freak out."
The long hours leave juniors isolated from everyone except other junior bankers
It's a well known fact - but one that was reiterated by Koelliker's interviewees - that you have little control over your time as a junior banker. "Even if in the morning I have the feeling that it's going to be a good day and I am going to meet for dinner, maybe I will still be on a task until 2am the next morning," said one interviewee. Planning is therefore impossible, and juniors' sphere of non-banking friends shrinks to almost nothing.
Everything about your life becomes more intense
“Life as an analyst in investment banking is more intense in every regard," said one interviewee. "You work more, when you have free time, you celebrate more, you drink more, you spend more money." You try to experience more in the little time that's available.
Many mothers try to persuade their children to quit
Various interviewees said their mothers were concerned about their working hours. "My mother would rather have me in a less intense professional environment," was a typical response.
Fathers generally seemed more relaxed - one interviewee said his father was a concert musician and understood the pressure he was under: "The last performance is the one that counts. If you've played great 20 times and whistled totally the 21st time, guess what, the press writes about number 21."
The work itself can be boring
It doesn't help that the work itself can be tedious. One of the juniors Koelliker spoke to said 40% of his time was spent on analytical work and that another 30-40% was spent on admin, with the remaining 20%-30% flexible.
Another said that only 20% of the work challenges him more than average. 30% challenges him the same as average and 30% challenges less than average and is "not demanding at all."
It all "makes one rather stupid," he observed.
The technology is ancient
One of Koelliker's interviewees observed that he was still working on Microsoft Office 2007 and that switching to newer systems was a "long process" with lots of sensitive data. Another said that setting up a conference call with five senior bankers required five emails to five different secretaries. "It probably takes 30 emails to get onto such a call." Another observed that it took 20 minutes to log-in when he worked from home.
But banking jobs aren't as bad as people think
Many of the juniors Koelliker spoke to also stressed the camaraderie on their teams: "The team is very open, friendly, not at all arrogant," said one, who said the senior bankers were equally approachable and that he was, "pleasantly surprised" as a result.
Banking offers an incredibly steep learning curve
The main appeal of jobs in investment banking is that they offer an opportunity to learn a lot, very quickly, said Koelliker's interviewees. You gain leadership skills and you get to meet with C-suite executives. Working in investment banking provides you with a "tool set" that can be applied elsewhere, like in private equity and on the buy-side. "You learn things you would not learn on a 9-5 job."
Banking has become an 'apprenticeship' career: people stay for a few years and then move on
However, Koelliker found that the best people often consider investment banking to be no more than a kind of "University 2.0" where they stay only to gain skills like analyzing company accounts which will allow them to do something else. As a result, he said banking is no longer seen as a "straightforward career path" for life, but an industry you work in for a few years before leaving for private equity, consulting or to become an entrepreneur.
"The average length of time analysts spend here is between one and a half to two years," one more senior banker told him. "The bank has a huge problem," he added. People are trained-up and only become "really productive after about one and a half years," after which they move on again. "Associates are very valuable," he added.
The people who stay in banking are in danger of being lower caliber
Because the best young people in banking find it easy to move into other spheres, the risk is that banks end up stuck with the least desirable of their junior recruits. "The best of the best are probably more likely to go into private equity, because logically they can earn more money there," said one of Koelliker's interviewees. "The remaining MDs don't necessarily have to be bad, but there is a lot to suggest that they were not good enough, or ambitious enough, at a young age to land a good exit."
Some of the juniors Koelliker spoke to observed that senior bankers weren't all great role models. While some had used the money they'd earned to do unusual and exciting things, others had neglected their private lives due to their "massive work load." - "This group of people is probably bigger than in other professions where you work nine-to-five or nine-to-seven," said one interviewee.
But it's a shame so many people leave, because the hours become more manageable with time and the work becomes more interesting
Nonetheless, it's a shame that so many people leave after the first two years, because banking hours become more manageable in time. One interviewee said he worked 60-80 hours a week as a vice president and then 45-70 as a director. Another more senior banker said he was now in the office from 8am to 8pm and had more control over his time. "You rarely do all-nighters as a VP," he added. "And never as an ED."
The more senior you become, the less time you will also spend on tedious admin. One senior banker observed that there were still plenty of administrative tasks to be done, but they were associated with management rather than process.
Being a senior banker is probably better than being a senior consultant, lawyer or accountant
Senior bankers also told Koelliker that their lives seemed better than those of counterparts in other professions. "As an investment banker you have a job in which you do a lot, are on the go and theoretically work from anywhere in the world," said one, observing that this was better than working in a role where time is monitored and you always have to be in one place. The downside is the need to be available 24 hours. "I have probably hardly taken a vacation in the last ten years," he said. "Normal people know a weekend is a weekend or a vacation is a vacation."
Young people who go into banking don't mind working hard. They just don't want to be worked into the ground
Despite the complaints about working hours, Koelliker found that young people who go into banking don't mind working a lot longer than average. - It's just that they want to work a 7/10 week and not a 10/10.
"I am dissatisfied if I can't do sports for over two weeks," said one junior. Another noted that he was "definitely not one of those people who need a very balanced among of free time." That would be impossible in his job, he added.
It's the expectation of extreme overwork, and the lack of meaningful influence that drives people away
Ultimately, Koelliker found that it was the extreme overwork in banking that helps drive people away after a few years. One respondent said that for him, memories were more important than consumables and that for this reason he wanted to work for a limited amount of time and then "put some money aside and go traveling."
Another said that in banking you have "no self-realization" for the first ten years. "Normally you say 'yes and amen' to what the person above you commands and do just that."
But banks could change
Koelliker said Generation Y are different to their predecessor. They need a good work-life balance, regular and structured feedback, meaningful influence on essentials decisions, access to technology that increases efficiency and ongoing training from their employers. If banks want to retain junior staff in higher numbers, they need to address all of this, soon.
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