Should you brace for Brexit or get in on the Trump bump? There's always been a flow of talent between Wall Street and the City of London, but New York is suddenly looking like the place to be. Everyone is wondering what promises president-elect Donald Trump will see through on, but after mocking Wall Street throughout his campaign, he's now brought in senior bankers to his administration. Meanwhile, London faces a slow deflation after the Brexit vote.
But if you're a financial services professional considering your options right now, should you move to London or New York?
The impact on investment banking is unclear under a Trump presidency. The current uncertainty is not good for the advisory functions, but increase volumes across fixed income currencies and commodities desks could present opportunities. What's more, treasury secretary Steve Mnuchin has already said that he is looking to roll back parts of Dodd-Frank and the Volcker rule. Prop trading could be back, or investment banks could end up bolstering their thinned out trading desks to deal with increased volumes.
Uncertainty rules in London too, which means less advisory activity. But the sales and trading divisions of investment banks are likely to be split up and, to an extent, relocated across to another EU country to ensure that banks retain access to the single market. Consultants Oliver Wyman think 31,000-35,000 jobs could be lost in London in a worst-case Brexit scenario.
Jeanne Branthover, a partner at DHR International, says that U.S. expat bankers are now moving back to New York. “Right now I do not see many bankers asking to move to London,” Branthover said. “London is very expensive, firms have lessened the benefits they give to expats, and there is the unknown of the effects of Brexit. Most of the bankers I know in London have been moving back in the past few months or actively looking to get back here,” she said.
Also the U.S. is favorably looked at as the place for companies to invest right now. With strong M&A and IPO activity, many bankers want to be where the action, which seems to be the U.S. right now, Branthover said.
“Bankers also are no longer just in New York City, so lifestyles will vary and cost of living can be less if they have a choice to work elsewhere in the U.S. outside of New York,” she said.
The average price of a house in London is ₤600k ($743.7k), with central London homes averaging ₤1.4m ($1.73m), according to property website Zoopla. U.K. housing rental prices were 2.3% higher in September than they had been a year earlier, rising at nearly four times the rate of inflation, according to the Association of Residential Letting Agents.
Manhattan is incredibly expensive too, but there are more affordable options within commuting distance, including Westchester and Long Island in New York, Connecticut and New Jersey. A TripAdvisor study found that London is the most expensive city in the world for tourists based on the cost of a meal for two with wine and cocktails, two taxi rides and a stay in a nice hotel. In addition, the Economist Intelligence Unit's Worldwide Cost of Living survey ranked London the 15th most expensive city in the world to live in, compared to 26th for New York.
Most investment banks in London have bolstered salaries for their employees to circumvent European rules on capping bonuses at two times base salary. No such restriction exists in the U.S. In the mid-ranks average compensation for VP investment bankers in London is £317k ($400k), according to recruiters Dartmouth Partners. Average compensation for VP in New York ranges from $375-650k, according to headhunters Options Group.
In London, class matters in banking - you're not even likely to get in unless you exhibit the sort of polish usually seen in the upper middle classes. Kathleen Lauster, New York-based managing director at Silver Leaf Partners, an institutional brokerage, custodian and clearing house, has an investment banking background, having worked at Merrill Lynch, J.P. Morgan and Houlihan Lokey, in addition to a stint working as a senior consultant at Deloitte.
There is slightly more of a meritocracy at work in New York, she says, and a little easier to advance even if you do not come from a blue-blood, white-shoe background, she said.
At least you see the sun in the winter in New York, and you’re not subject to the eternal rainy or foggy London gloom, said Lauster. The layout is also arguably more organized and less spread out than London, so it's easier to get around and explore different parts of New York City – on foot when the weather does cooperate.
Don't write off London entirely
Lauster points out the breadth of experience you can get by working in London. It's (still) the gateway to Europe, the Middle Easy and North Africa, which means that as an investment banker working on cross-border deals you can get exposure to different cultures. This experience can help your career. Your colleagues in London also tend to be a bit nicer than your typical Wall Street heavy-hitter, she says.
As we mentioned, the City still favours those from the upper crust of British society, but as an American you get something of a free pass, said Lauster. Brits tend to universally accept Americans and are little less concerned whether their brethren across the pond attended the right prep school, she said.
One more thing, if you want to make it in banking in London - get your drinking shoes on. “Drinking with colleagues is a big part of the culture, and Londoners drink a lot – even by New York standards,” said Lauster.