If one industry is known for burning its babies, it’s banking. Which other sector of the economy hires thousands of elite students, works them for 80-120 hours per week and blows them out as ashen versions of their former selves a few years down the line?
Banking’s reputation for incinerating its young has caught the imagination of academics and authors. Alexandra Mitchell, an ex-investment banker turned turned assistant professor of management and organisation at the University of California, spent years following young bankers and concluded that burnout peaks in years four to six, as banking bodies rebel against the punishing schedules imposed upon them. Author and journalist Kevin Roose followed eight young bankers in their first years on Wall Street and declared that those who survive are either geeks, adrenaline addicts, people for whom money is everything, or people who know how it is because their parents work in banking. The neophyte bankers who drop away are those who are uncertain whether the job is for them. There are no halfway houses in an industry that’s full-on
And yet the eFinancialCareers Career Satisfaction & Retention Survey revealed some surprising facts about burnout in the banking industry. Burnout is highest in the mid-career years: it plateaus rather than peaks. Burnout is far higher in Asia and the Middle East than in the fast-moving markets of London and New York. European banks have a higher proportion of burned out staff than the hard-driving American houses. And private equity – often seen as a haven for overworked bankers, has one of the highest incidences of burnout in the financial services industry in the UK.
Our research suggests that burnout in banking isn’t a sudden thing: it can endure for years.
In most of the countries we looked at, burnout peaks between the ages of 25 and 44. In some countries (for example, the UK and Singapore), it then falls back among bankers who remain in the industry. In others (the US, Hong Kong) burnout remains high through to the mid-50s.
A surprisingly small proportion of people in banking are totally burnt out. However, a large proportion say they’re either ‘somewhat’ or totally burnout. In the UK and the US, for example, between 60-65% of bankers aged between 25 and 44 report some levels of burnout. In the Middle East this rises to 73%-77%. And in Hong Kong up to 80% of mid-career bankers are burned out to some degree.
What makes for such an elongated burnout zone? Michel’s research found that burnout rises as bankers hit their mid-20s. At this stage, she said it becomes obvious that they can’t keep pushing themselves so hard: the bankers she studied “developed embarrassing tics, such as nail biting, nose picking, or hair twirling.” Thereafter, however, things are supposed to get better – after six years in the industry Michel’s bankers took better care of themselves. They learned that this was the only way to survive.
However, Michel’s study was conducted over a nine-year period and is already several years old. Today’s mid-ranking bankers face a different dynamic. Competition for promotion is fiercer, jobs are being cut and bankers are being forced to achieve more with less. When we spoke to Michel a few months ago, she said mid-ranking bankers who’ve started to burn out early in their careers are now pushing themselves rather than taking a step back. Is this why the burnout plateau lasts until bankers hit their mid-50s?
Notably, the Middle East, Hong Kong and Singapore have some of the highest self-reported burnout levels among bankers globally. By comparison, London and New York look tame and Frankfurt looks like a stroll in the park.
What makes Middle Eastern and Asian bankers so prone to burning out? Dissatisfaction in Dubai is well-documented, with bankers there feeling disproportionately disgruntled with their bonuses. One UAE-based banker offers a perspective on the high levels of burnout in the desert cities: “People don’t work long hours here, but there’s an awful lot of heavy-duty partying,” he tells us. “It doesn’t help that people end up making far less money than they’d expected – it’s very easy to earn and spend a lot here and people can get frustrated at how difficult it can be to do business.”
Hong Kong is equally notorious for its hard-living culture, although recruiters there claim they don’t encounter burnout in candidates. “Most of the people I deal with in the front office work extraordinarily hard but they get paid an arm and a leg for it,” says Matthew Hoyle, director of head hunters Matthew Hoyle Financial Markets in Hong Kong.
The outlier in the burnout stakes by financial services centre is clearly Frankfurt. While two thirds of London bankers and 60% of Wall Street bankers aged 35 to 44 say they’re somewhat or totally burned out, only 56% of Frankfurt bankers do. What’s the city’s secret? “If you work for Deutsche or Commerzbank, you’ll still be working your backside off,” says one German banker. “But if you work for a retail bank or a Landesbank you’ll have a far easier time.”
Everywhere, we found that female bankers are more burned out than their male counterparts. In countries like the U.S. and France, the discrepancy in burnout levels by sex is startling: 20% of female bankers in the US say they’re totally burned out compared to just 12% of men. In France, 28% of female bankers are totally burned out while just 15% of men are.
It doesn’t take powers of deduction to establish why women find banking careers so corrosive. Long hours are fine if you can afford multiple nannies, but less fine if you can’t. There are comparatively few women at senior levels in banks, meaning those who make it feel pressured to perform.
“Women tend to be more conscientious and eager to please than men,” says Sarah Sparks, an executive coach and former Goldman Sachs employee. “Most of the time you can get 80% of the work done with 20% of the effort. Men tend to stick to that 80%, while women go the extra mile.
“Women are also slower to put themselves forward,” says Sparks. “It makes it more difficult for them to get ahead than men – they end up having to work harder.”
Anyone who thinks they can work in a middle or back office finance job and thereby avoid the feeling of being burned out is likely to be disappointed.
Contrary to perception, our research suggests that people who work in so-called middle and back office jobs like risk, compliance and operations are generally as likely to be burnt out as their counterparts in ‘front office’ banking jobs like M&A, sales, trading and research. On Wall Street, levels of total burnout are significantly higher in the back office than the front office.
Recruiters say middle and back office roles are becoming increasingly high pressure as regulatory requirements in banking rise. “Banks are keen to be seen as being proactive in the area of regulation, and there is a strain on their middle-office workforce to meet deadlines,” says Holly Hatton at Michael Page in Singapore.
Traders are better able to tolerate high stress and long hours because they expect to be in a position to retire soon, says Nicholas Wells, managing director of search firm Webber Chase. “They are prepared to live this life as they know it will only be for 5-10 years and then they can retire,” he suggests.
Surprisingly, perhaps, employees at European banks have similarly high levels of self-reported burnout to employees at hard-driving U.S. firms. This is particularly the case on Wall Street, where 77% of bankers at European (but non-UK) firms claim to be either totally or partially burned out, compared to just 66% at home grown US banks. One European banker who has worked for both kinds of institution suggests a reason why: “European banks recruit a lot of senior people who are making a pre-retirement move in their careers. They’re burned out before they even arrive there,” he says.
Globally, the worst incidence of ‘total burnout’ is in Singaporean hedge funds, where 33% of respondents report feeling utterly burned out.
The Singaporean hedge fund market comprises 288 funds with $15.3bn in assets under management according to Singapore-based data provider Eurekahedge.
What’s causing all the stress? Tighter regulations don’t help. Nor do the scars of the financial crisis, when hundreds of recently founded Singapore-based hedge funds closed. Equally, many of those working in Singapore’s hedge fund industry are expats, who may lack a family support network. Research by Singapore-based academic Professor Melvyn Teo suggests hedge fund performance suffers during times of emotional stress and marital disharmony, setting up a potential vicious cycle of stress at home and poor performance at work.
In London, it’s private equity funds that account for the highest percentage of somewhat and very stressed people. 70% of London PE staff fall into this category. “Private equity can be incredibly stressful when you’re working for a fund that’s losing money,” says Gail McManus at Private Equity Recruitment (PER). “It’s a different kind of stress to banking,” she adds. “There’s also frustration – you can spend years working on deals without ever actually completing an investment.”
On Wall Street, it’s banks of all nationalities that should be avoided by the burnout-wary. 19% of Wall Street bankers are totally burned out, but staff working in M&A boutiques aren’t far behind. “My life doesn’t belong to be any more,” one Wall Street analyst told Roose. Roose points out that young Wall Streeters live at the mercy of all those above them in the hierarchy: ‘An MD wants a bar graph instead of a line graph on page 6 of a pitchbook and it’s 3am? A good analyst will wake up and spring into action.”