As someone who worked in banking for 17 years and rose to become a managing director, I've seen a lot of change. If you're working in financial services now you need to remember this: business and financial cycles always go longer and further than expected.
It has been seven years since the global financial crisis. Seven fat years for financial markets, but seven lean years for the real economy. There has never been such a big gap between Wall Street and Main Street.
This gap is the cause of the increasingly divided societies in the West and the resulting unpredictable political process everywhere in the world.
It's because of it that change is coming. Like every cycle transition, the shoots of the new trend are still weak; they are only perceptible to the careful observers.
Around the world, you are seeing the rise of populism and nationalism and a turn away from globalization.
It isn’t good news for financial markets. The existing situation was already bad enough: central banks were constraining the risk free rate - leading to a mis-pricing of risk. Now with the rise of these political forces, capital has yet another concern.
So, how do you position yourself in your life and career for these forces, rather than being overwhelmed by them?
I was extremely lucky: starting out in 1999 I had the wind at my back for almost two decades. You, unfortunately, don’t have that luxury.
If I were you, this is what I would do: Understand the change.
If you look at the finance industry now, there are a number of forces causing a dislocation of the old ways. These include rising regulation, whether MIFID, ESMA or Dodd-Frank. They include Brexit. They include the impact of technology, already visible in the rise of dark trading pools and in data analytics tools like Kensho. As capital requirements increase and banks withdraw from market-making, falling liquidity is causing the industry to change and shrink.
Combine those forces with the cultural change being brought on due to political and regulatory scrutiny. Risk-taking isn’t rewarded in the same way, the banking industry is being held to a much higher professional standard than ever before. These are huge changes. They aren’t going away. They aren’t cyclical. These are permanent structural changes in the nature of the industry, and not many people realize it. Yet.
Be the solution:
Once you can see the change, you have to have a strategy for how you will survive it.
This is what I would do, this is what I am doing.
- Firstly get some perspective, step back. Think about what the people paying you really need. - What do they want? What do their clients want? Before you can offer a solution, you need to really understand their problem. And to do that, you'll need a combination of distance and rationality.
- Secondly, adapt rapidly. Don’t be afraid to keep pivoting, changing, adjusting. Whatever you're doing now may not exist in future. Keep your eyes open, and you will have the opportunity to jump onto something that will.
- Thirdly, spend some time every day and at the weekend thinking about change. Assume you're going to lose your job next week: what would be your next step? What do you wish you knew? Who do you wish you knew? Step up Plan B, C and D before you need them.
- Fourthly, build skills. If you want to pivot when the time comes, you need to build your skill-set. Maybe this means programming languages, but it also means human skills. In sales, for example, the people who survive will be those with relationships with key clients or who can use new technology to maximize their efficiency. Ultimately, you want to be the person who can't be automated, and the hardest thing for machines to do is to build human relationships. You want to be the person who can sell and connect on a human level, who can present and speak persuasively and who can convey your views and convince people with your writing.
Change wont be easy, but it is an opportunity. Change means that all sorts of new roles are going to be available. Get ready to grab them.
The author is a former Goldman Sachs managing director and blogger at the site What I Learned on Wall Street (WilowWallStreet.com).
Photo credit: Dislocate by Thomas Hawk is licensed under CC BY 2.0.