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Morning Coffee: The hard life of the 40 year-old on $160k. Morgan Stanley banker shows how it’s done

Silicon valley vs wall street

When you can't afford the juice.

If you don’t make it by your late 20s, you need to make it by your late 30s. If not, your 40s could be harsh indeed. So suggests a piece by the Guardian on the lives of technologists in Silicon Valley which should resonate with the lives of bankers on Wall Street or in London.

The Guardian spoke to various technologists at top name firms (Facebook, Twitter, Apple) who ought to be ‘living the dream’ but patently aren’t. They earn good money, but it’s gobbled up by the cost of living. In Silicon Valley, a bagel and coffee costs $8, a freshly squeezed juice costs $12, a two bedroom apartment costs $3k (bare minimum) a month. The Guardian finds an Apple employee who lives in a garage and uses a compost bucket as a toilet. It also finds a tech worker on $700k who exhausts himself commuting up to 2.5 hours each way and wants to move closer to work, but can’t afford it.

While the horror stories should be enough to dissuade “top talent” from leaving banks on Wall Street for the lure of technology firms in Silicon Valley, they should also be a warning to anyone imagining a six figure salary will buy the good life. The fundamental problem in Silicon Valley is property prices: they’re crazily expensive. The same applies in major financial cities. Yes, you’ll pay more for somewhere to live in Silicon Valley than you will in New York – but not that much more, and you’ll pay more than in New York to live in London.

The high cost of living means Silicon Valley employees need to be earning big money before they start a family. If not, they’ll be squeezed like the Twitter software engineer in his ’40s on $160k a year who says he’s only just making ends meet. With two children, he tells the Guardian he can’t compete for property with the big groups of 20-somethings who are happy to share to accommodation and pay $2k a month for a room. “Families are priced out of the market,” he complains. At this point, you need either to live in tiny accommodation with your family, to commute miles from a cheaper zone, or to accept a lower salary and a proportionately lower cost of living elsewhere. In Silicon Valley terms, this means moving to somewhere like San Diego. In banking terms, think Salt Lake City, Jacksonville, or Birmingham in the UK.

Separately, if you were looking for an M&A career template, Emmanuel Gueroult just provided one. Gueroult’s strategy involved spending two decades at one firm and then leveraging the contacts he made there for roles in future. After 22 years at Morgan Stanley, he went to work with what the Financial Times describes as a, “cadre”, of former Morgan Stanley bankers at Altice, the expansionary French telecoms group. Two years later, he’s quit again, this time to join PJT Partners, the independent advisory firm set up by ex-Morgan Stanley banker Paul Taubman.

Meanwhile:

“Banks’ market-making ability has changed so we are looking to data aggregation and sorting to source liquidity. This would have happened 10 or 20 years ago if big banks had not got into the market in the 1990s and given the buy side the luxury of relying on big pools of liquidity.” (MarketsMedia) 

“I think we are going to see more very large-cap M&A,” says Alasdair Warren, head of European corporate and investment banking at Deutsche Bank. “This will partly be driven by relative currency values and people reacting opportunistically to the dislocation in values that has occurred because of Trump and Brexit, but also because people have realised that despite the increase in political turmoil, the world has continued growing.” (Financial Times) 

60% of asset management staff find their jobs boring. “Working in education or IT is regarded relatively highly, whereas financial services are generally regarded lowly.” (Financial Times)

How low can Paul Tudor Jones’ fees go? (WSJ) 

Goldman Sachs’ new London office to open in time for you know what. (Dealbreaker)

Judge rules Barclays banker cannot keep comfort dog in London flat. (Evening Standard) 

You’re a financial failure if you haven’t saved twice your salary by the age of 35. (Yahoo)

There are people in Beijing commuting six hours a day. (BBC) 


Contact: sbutcher@efinancialcareers.com


Photo credit: freshly squeezed by {Anita} is licensed under CC BY 2.0.

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