Young US bankers switch to a better life
Opting Out | Ninety-hour weeks and a relentless pursuit of deals have put many MBAs off investment banking
IT WAS a Friday in the autumn of 2004, and Umber Ahmad had been invited to read a poem at the wedding of one of her closest friends.
She was planning to catch a 7pm flight from New York to Toronto when a vice-president at Morgan Stanley called her in.
The client in a big merger deal needed work done over the weekend. A mergers and acquisitions specialist, Ahmad had no choice. She cancelled the flight, and started revising her analysis of the deal.
The missed wedding was just one of dozens of dinners, family get-togethers and other events that Ahmad did not attend as she worked 70- and 80-hour weeks as a young associate at Morgan Stanley and later as a vicepresident at Goldman Sachs.
Ahmad, the Michigan-born daughter of a Pakistani doctor who taught at Harvard Medical School, likens the long hours and all-nighters to serving in the army.
“The military will show you that sleep deprivation is a form of torture,” she says. “Not being able to get regular sleep is a detriment to your life, to your health.”
Her life revolved around her job, she says. She dated another banker. Many of her friends were — and still are — bankers because they understood last-minute cancellations and upset holiday plans.
“You always remain close to the people you’ve gone to war with,” she says. “It’s a lot of misery they can understand.”
Ahmad says she loved her job, as exhausting as it was. “It was exciting; it was drinking from a fire hose every day,” she says.
She left Goldman in 2007 to start her own investment firm. She didn’t forget that in her rare leisure hours at the banks, she used baking to help ease the stress.
So, in 2013, Ahmad founded MahZe-Dahr Bakery, a New York-based luxury pastry company launched with celebrity chef Tom Colicchio.
She is also a managing director at New York investment firm Spe- cialised Capital Management & Advisory.
For Ahmad, banking was a springboard to her new life as an entrepreneur.
“As hard as it was and as trying as it was and as sleepless as it was, it also afforded me the opportunity to be where I am today,” she says.
Some of the best and brightest of Wall Street’s young investment bankers are quitting their high-paying, prestigious jobs at big financial institutions.
Many are setting up their own businesses, especially in technology.
While there are no precise statistics on the trend, figures from the US Census Bureau show that the number of employees aged 25 to 34 in the New York metropolitan area in finance and insurance fell to 109 187 in last year’s second quarter, down 19% on 2007’s second quarter.
Forgoing a personal life has long been considered a fair exchange for the prestige and riches that can be earned in investment banking and trading. Competition remains intense for the coveted two-year bank-training programmes that pay
The military will show you that sleep deprivation is a form of torture
graduates and new MBAs from $100 000 to $300 000 a year.
That talented young people are questioning these trade-offs does not surprise Patrick Curtis, who worked as an analyst for two years at boutique investment banking firm Rothschild a decade ago.
“It’s definitely not worth the money,” says Curtis, 34, who now runs a career advice and networking website called WallStreetOasis.com.
“You’re working 90 hours a week on average. It can go up to 120 when it’s really bad. Is it worth it? No.”
At elite universities, fewer MBA and finance candidates are willing to even consider a life of missed wed- dings, broken romances and deep-into-the-night deal negotiations.
The percentage of Harvard Business School graduates entering investment banking, sales or trading dropped to 5% last year from 12% in 2006, while those entering technology almost tripled to 18% during that period.
At the University of Pennsylvania’s Wharton School, the percentage of MBAs entering investment banking dropped to 13.3% last year from 26% in 2006, while those entering tech more than doubled to 11.1%.
“There’s less willingness on the students’ part to make the sacrifices that they might have been willing to make five years ago, 10 years ago,” says Jonathan Shepherd, associate director of the MBA career and professional development office at the Harvard Business School and a former analyst at JP-Morgan.
Banks are acutely aware of the excessive attrition rate among young associates and analysts — the titles carried by most junior bankers — and have initiated programmes to combat it. Goldman Sachs and JP-Morgan, among others, are rethinking the way deals are brought to fruition.
“There’s a war for talent,” says Jeff Urwin, who was promoted last month to co-run corporate and investment banking at JP-Morgan. “You’ve got to compete.”
One result is guaranteed days off to keep young employees from burning out. The banks are focusing attention on their M&A groups, where sevenday, 80-hour work weeks are the norm, and the hours can run around the clock in a big deal like Comcast’s $45.2-billion offer to buy Time Warner Cable. The banks involved: JP-Morgan and Morgan Stanley.
Last August, Bank of America intern Moritz Erhardt, who worked in the firm’s London office, died after round-the-clock work on a merger.
You always remain close to the people you’ve gone to war with
Though the official cause of death was an epileptic seizure, Mary Hassell, the pathologist who investigated the death, says that his fatigue may have triggered the convulsion that killed him.
The 21-year-old banker was found dead in a shower at Claredale House, a student residential facility in East London.
“Moritz had a natural cause of death, though it’s not so natural that a young man should die like this,” Hassell said during a formal inquiry in November.
In January, Bank of America ordered its managers to “closely monitor work volume” among junior bankers and summer associates.
The policy also specifies that analysts and associates should take off four weekend days a month and requires that they take all their vacation days.
Erhardt’s death raised a more general alarm among bank executives.
“I’m not sure how you stop work if there’s a deal on,” Morgan Stanley CEO James Gorman said on Bloomberg Television in January. Yet the incident in London, he said, “caused everyone to step back and say, ‘Hey, have we got this right?’”
Managers at JP-Morgan, which employs 1 000 men and women as associates and analysts worldwide, track their hours.
Now JP-Morgan and Goldman Sachs have formed in-house committees to improve the experience of their junior bankers. At Goldman, the resulting changes included forming a junior banker career-development committee, and the firm has adopted several of its recommendations. One change: Goldman did away with its two-year training programme in 2012 in favour of hiring new graduates on permanent staff.
In an effort to reduce the workloads of young bankers, Goldman changed the way senior managers commission work so junior bankers do not have to create a 50-page presentation for a client when a 15-page report would suffice.
In October, Goldman began requir- ing entry-level bankers and slightly more-senior associates in the investment-banking division to take Saturdays off.
Kevin Roose spent three years following the careers of eight young bankers for his book Young Money: Inside the Hidden World of Wall Street’s Post-Crash Recruits. He says it’s good that the banks are taking better care of their junior bankers.
“But this is not a charitable act,” Roose says. “They’re losing a lot of their young people, and they’re having a lot of trouble recruiting, so these banks are panicking about how to keep hold of the next generation.”
The typical professional stays on the job for seven to nine years before changing careers or leaving for other areas of finance, according to a study to be published soon by Alexandra Michel, who started her career as a junior banker at Goldman Sachs in 1992, and now teaches management at the University of Pennsylvania.
Michel, who has a PhD in management from the Wharton School, has spent the past 13 years studying working conditions of investment bankers. She has found that the long hours and stress begin taking their toll after four years.
“In year four, physical breakdowns occur, initially minor,” she says. “Chronic pain, insomnia, endocrine disorders set in. Pain is really common.” Weight gain, hair loss, anxiety, depression and generalised low energy are also common complaints, Michel says.
When severe stress kicks in, the young bankers are often able to perform at a high level only with the help of high-caffeine drinks, prescription stimulants and sleeping pills, she says.
Executives can be less interested in their young assistants’ health than they are in getting a deal done, former junior bankers say. One recalls working on a deal through a nasty sinus infection. When the banker resisted flying out of town to meet with the client, the managing directors said it was mandatory.
The pressure from the flight ruptured the banker’s eardrum, which started bleeding. The team pushed on with the deal talks, despite the banker having lost hearing in one ear.
On his return to New York, the banker went straight to the emergency room, where doctors ordered no flying for the next five months, preventing him from attending future client meetings on crucial deals.
Former junior bankers say they learnt quickly how to make do on four to five hours of sleep a night, especially during the financial meltdown in 2008 and 2009. — Bloomberg