- A year of uninterrupted work at home has exhausted Wall Street’s junior investment bankers.
- Now, Wall Street bosses fear that young bankers have lost their desire to continue with the profession.
- While there is hope for an end in sight, WFH will persist in many companies at least until the summer.
- Visit the Business section of the Insider for more stories.
The decline in the coronavirus case count and plans to increase vaccine distribution in America have some on Wall Street hopeful that the end of the pandemic will be less of a mirage and more of an approaching finish line.
But as we approach the one-year anniversary of when US investment banks started sending employees home, Wall Street bosses fear that the protracted nature of remote work is disenchanting some young employees to pursue long-term careers. in the sector.
In the past few months, top executives, including Goldman Sachs CEO David Solomon and JPMorgan Chase CEO Jamie Dimon, have expressed concern about the lingering effect of remote work on their junior ranks and are pushing to bring employees back to the office.
But with Morgan Stanley and Wells Fargo notifying new summer interns that they will start their internships remotely, this optimism to return to the office may be undermined by the reality of the pandemic.
Meanwhile, investment bank earnings for major banks have increased 23% to $ 49.4 billion, according to Coalition, but the number of employees to handle the additional workload has not grown correspondingly. The front-office team was stable compared to 2019 and revenue per full-time employee increased to $ 2.9 million, an increase of 23%.
Kevin Mahoney, partner and head of investment banking, private equity and private credit practices at the recruitment firm Bay Street Advisors, told Insider that he is seeing signs of exhaustion at the junior and intermediate levels.
Just this week, a client told him that an associate hired last February had already resigned. Meanwhile, a vice president at a top-tier investment bank also resigned this week to join a private equity firm and was receiving calls from a handful of takeover competitors and investment banks in the hope of convincing him to join. interview before officially starting the new job, Mahoney said.
While they don’t make headlines and bring in fantastic deals, trusted mid-level and junior employees are a boon to investment banks, as they must handle the heavy lifting of executing transactions – and they come with a fraction of the cost of directors or partners.
In addition, they are expected to bear the burden of 80-hour workweeks and infamous nights at the office – although the reality of reconciling with these demands at home presents its own set of challenges.
But despite signs of exhaustion, poaching this coveted talent pool has also been a major challenge. The working conditions that are eroding the edges are simultaneously creating obstacles to abandon the ship.
An energy market for businesses has kept junior bankers busy thanks to a record number of SPAC IPOs and strong M&A activity from the beginning to 2021.
“Everyone seems to be looking for associates, but they just don’t have time to even receive calls and explore outside opportunities. This is also the case in bank and private credit,” Mahoney told Insider. “Vice-presidential candidates are also feeling the pressure.”
Even young bankers who are dealing with the workload are feeling disconnected, as they have spent a great deal, if not all of their time in office, without any personal camaraderie.
For junior bankers, there is an obvious neglect of practical training and guidance to worry about, but there is also the most disconcerting and ineffable feeling of not actually doing the job, despite all the hard work from last year.
“Many feel they have not yet done the real work they should be doing as part of a team. As a result, many want to wait and see what it will be like when they are back in the team environment before deciding whether it is suitable for them,” he said. Mahoney. “In other words, how do you get out of a job that you still don’t feel like you’ve really started?”
Parents are adding pressure and there are few valves to vent
During the pandemic, bankers had fewer options at their disposal to profit from the exhausting hours and tiring schedules they pull.
For example, luxury dinners in the city and luxury vacations when time is allowed are largely out of the question, replaced by the relentless monotony of continuous work.
“The things that alleviate the blow – that alleviate the pain of you losing the best years of your life – you couldn’t have, so you’re just working and putting money in your checking account every month,” said Logan Naidu, founder and CEO of research firm Dartmouth Partners in London.
Working from home, for many junior bankers, does not mean being able to close deals in the comfort of their beds. For many, this has put them close to their parents, many of whom are struggling to come to terms with the bankers’ long and exhausting hours of work and the tribute these arduous demands can inflict on their children.
“Parents operate at a different speed than when you are in New York and at the center of the universe,” said recruiter Julie Kanak of the Diversified Search Group.
“They are two different worlds. And they are being brought together and colliding in that room in Kentucky,” she added, speaking metaphorically.
“The analyst fears that if they don’t meet New York expectations, they will be fired,” said Kanak. “And at the same time, they have Mom and Dad saying, ‘Why are you doing this to yourself?'”
Some unexpected benefits
Anthony Keizner, managing partner of Odyssey Search Partners in New York, said that not everything has been discouraging. In fact, the experience of some analysts, in some cases, has yielded some unexpected benefits.
An indirect effect of the pandemic was that the private equity recruitment schedule has been postponed, which means that industry PE recruiters, who recruit on behalf of some of the industry’s most important funds, have decided to back off a bit. This gives newbies to investment banks time to breathe before receiving interview offers for competitive private equity jobs.
This was largely a reflection of recruiters’ collective belief that junior investment bankers may well not be ready for a buy-side transition at this time, given their relatively limited, if not all, remote experience.
And that concern may, in an indirect way, be giving some analysts the chance to start working on more business, while the PE hiring cycle remains in limbo.
“The traditional hiring cycle – private equity, the pot of gold at the end of the rainbow – has not yet become available,” said Keizner.
This is making some analysts who hope to leave investment banks as soon as possible willing to wait until the recruitment cycle begins.
Some are “waiting for this before they consider another move in their careers. In the meantime, to coin a phrase, they are willing to swallow,” he said.
“I wouldn’t say that everyone is disenchanted and hates their job, they didn’t know what they were doing and they want to leave the industry,” added Keizner.
“We certainly heard from people who expressed the other view, which is that they were able to focus on work without the distractions of recruitment and that the business flow in 2020-21 was much better than the year before, and they feel they are gaining more business experience than their peers in recent years. “
Young bankers began to ask themselves ‘existential questions’
It’s no secret that Wall Street bosses are eager to get their young talent back to the office, and fast.
Speaking at the end of February at a Credit Suisse virtual conference, Solomon, the chief executive of Goldman Sachs, poured cold water on the idea that remote work would become a staple for younger employees.
“It is an aberration that we will correct as soon as possible,” he said.
“This is not a new normal,” added Solomon, saying that the nature of remote work was in conflict with his company’s “innovative and collaborative learning culture”.
He made it clear that he would not like to see another round of the company’s more than 2,000 interns “arriving remotely at Goldman Sachs in the summer”, which would deprive them of “direct contact, direct learning and direct guidance from the company.
He is not alone in this assessment.
Dimon, the chief executive of JPMorgan Chase, shares some of Solomon’s views.
“Benches are basically a learning model where you learn by sitting next to people and traveling with them or seeing mistakes being made. Often you need a lot of collaboration in the room,” he said, speaking at a Goldman Sachs virtual forum in December .
“You will not learn like that while sitting at home,” he added.
In the meantime, it seems that, at least in the short term, your hopes may be dashed.
The coronavirus pandemic remains a leaf resistant to the hope that normal life can begin soon, and companies like Morgan Stanley and Wells Fargo have told their interns in the past few weeks that they would expect to remain virtual for part or all of their summer internships.
The headhunters who spoke to Insider for this story shared the view that the impacts of remote work are a double blow to the junior talent of the biggest street players.
The experiences they had working remotely impacted their training in the tactical parts of their craft, in addition to influencing how they feel about the profession as a whole.
Naidu, the London-based recruiter at Dartmouth Partners, said last year’s events are forcing junior bankers to prioritize what they really want for their future, in a way they might not have done in the past.
“It was a difficult year,” he said. “A lot of people are asking the right existential questions, ‘What am I doing with my life? Is it making me happy? Is it making me healthy? Is it worth sacrificing all these things to put money in my bank account?'”
This post has been updated from its original version.
Are you a young professional from Wall Street feeling exhausted after a year of remote work? Contact these reporters with your story. Alex Morrell can be found at [email protected], or encrypted at Signal at 262-573-1023. Reed Alexander can be reached at [email protected], or at Signal at 561-247-5758.