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Investment bankers and traders are no longer running the playground

Cool kids

In some ways, Wall Street is like high school. You’ve got the cool kids (investment bankers and traders), the average schmos (asset and wealth managers) and the nerdy crowd that gets picked on and sometimes tells the teacher (compliance and risk). But over the last two years, the social hierarchy on Wall Street has changed a bit.

It’s no secret that money managers and risk and compliance pros have seen pay increases while many investment bankers and traders have had their comp slashed. With that money has come responsibility, and a newfound confidence that is apparently being strutted around the office.

“I don’t have to hang my head at the cocktail party any longer about what I do,” one wealth manager joked to the Wall Street Journal. A decade ago, the job was analogous with “a used-car salesman,” he added.

At Morgan Stanley, which just reported solid second quarter earnings mainly due to their brokerage department, money management has become its key focus. UBS has essentially punted on some riskier units to allocate more resources to wealth management. Even Goldman Sachs, a more traditional investment bank, sees investment management as a “centerpiece of its growth strategy.”

Then there are compliance and risk pros. No more swirlies for them either. Banks are “throwing money” at experienced middle office employees, many of whom are now being named to banks’ executive committees – something that would have been unheard of just a few years ago.

Meanwhile, many investment bankers and traders are seeing pink slips and salary cuts. They are no longer the belles of the ball. Or at the very least, they’re sharing room at the ‘cool table.’

“The former masters of the universe are not masters anymore,” Alan Johnson, managing director of pay consulting firm Johnson Associates, told the Journal.

So to recap, Wall Street’s social structure is now akin to an episode of “Glee” – or maybe “Grease,” depending on your age.

The Raw Truth About Being a Trader (eFinancialCareers)

For a behind-the-scenes (and hilarious) look at the industry, we turned to Wall Street trader-turned-stand-up-comedian Raj Majal.

Doing More for Less (eFinancialCareers)

Morgan Stanley’s securities division has posted another impressive quarter, headcount across the bank has continued to increase and yet, pay is still declining.

RBS Shutters Debt Unit (Bloomberg)

RBS is closing its distressed debt unit just one month after group head Jon Weiss walked away. Cuts should come largely from RBS’s Stanford, Connecticut branch, which is seeing substantial headcount losses.

Hug It Out (FIN Alternatives)

Hedge funders Carl Icahn and William Ackman have seemed to have ended their decade-long feud. They hugged on stage at a CNBC conference. “We had a business dispute 10 years ago,” Ackman said. “It took us eight years to work it out.”

Who’s Left? (FT)

Barclays Wealth is losing some of its identity. Rory Tobin, its global head of investments and solutions, is leaving to take a position at State Street after just 18 months on the job. The group’s chief executive and several other big names have also left recently.

Equities Slump Magnified (WSJ)

Every analyst was worried about fixed income revenue on Wall Street. They should have spent more time fretting about equities trading, which took an absolute bath during Q2.

Just Leave It Behind (Bloomberg)

Tech workers who take a firm’s code to their new employer are now facing penalties akin to those imposed on insider traders. Before it was a slap on the wrist. Now it’s a four-year prison sentence.

Buzz Around the Office

Money Maker (NY Post)

Model Gisele Bündchen earned $128,000 a day last year. I’m in the wrong business.

Quote of the Day: “No, 2014 is not the ‘year of active management’ and it’s not the Summer of George either.” Reformed Broker blogger Josh Brown on a difficult, slow year for stock pickers

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