Everyone knows that banking jobs aren't as special as they used to be. The pay is lower. The job security still isn't the best. Banking simply isn't the 'sexy' and prestigious career choice it was ten years ago. Even so, plenty of people still want to work in banking, and you're going to have to fight hard to get anywhere near an analyst or associate job in a top tier investment bank.
A new study by Quinlan & Associates, a strategy consulting firm specializing in the finance industry, suggests that winning the battle for a banking position might be something of a pyrrhic victory. People who work in investment banks have plenty to gripe about.
Quinlan asked 1,200 bankers across the Americas, Europe, the Middle East and Africa (EMEA), and Asia Pacific (APAC) for their opinions about their careers. The respondents were disproportionately working in the front office, especially in markets, and were mostly at global banks, especially at Europeans. If you're thinking of breaking into an investment bank, the results weren't hugely edifying.
Firstly, just because you get into a bank, don't assume you'll stay there. Quinlan highlights a study which showed that in 2015, the analysts and associates who quit finance left after just 17 months; in 2005, they left after 30 months. As the chart below shows, the voluntary turnover rate at European investment banks has been creeping up. At Credit Suisse in 2015, around 10% of people left voluntarily.
You probably know this, but pay at investment banks is falling as a proportion of revenues. As the chart below shows, UBS and Morgan Stanley used to pay over 55% of their revenues in compensation. Not any more. The only banks which have resisted the pressure to cut the allocation to employees are Goldman Sachs - which was pretty low in the first place - and Deutsche Bank (which is about to embark upon an unprecedented bonus cut).
You'll probably also know that banks these days are big on the idea of accelerated promotions. In an effort to keep juniors happy, they're now promoting them anything from six months to a year sooner, as shown by the chart below.
That's all very well, but as Quinlan points out, those expedited analysts and associates tend to face problems when they trying progressing beyond vice president to director and managing director. Quinlan cites the case of one bank's regional equities business, which had around 200 executive directors but only promoted two to MD. As we noted last week, none of Morgan Stanley's 156 new managing directors were from cash equities this year...
Once it becomes apparent that you're stuck and get a promotion, you'll start to get frustrated. As the chart below, showing front office turnover rates in an investment bank, demonstrates, turnover rates are highest for associates and vice presidents. Once you make executive director (ED) and managing director (MD), you're far less likely to quit of your own accord. Unfortunately this contributes to the bottle neck at the top.
While you're twiddling your thumbs, hoping to get promoted, you'll also be trained less than your historical counterparts who were paid more and promoted more frequently. Bad luck.
You'll find that you're working with a lot of men. Maybe this isn't an issue. Maybe you like a mostly male environment. It will help if you do, especially if you make it into senior management.
If you've been reading-up on banks' efforts to shorten working hours, you might also figure that you'll get weekends off to lie in bed or take city breaks. Actually, no. As the chart below, showing banks' 'protected time' initiatives, reflects, the protected weekends don't amount to much. At Goldman, Citi and Credit Suisse you'll get Friday nights and Saturdays off (with the Friday night watershed starting late). At J.P. Morgan and UBS you get one weekend off a month.
After working all these weekends, you might fancy a longer break. Unfortunately, as the chart below shows, banks aren't big on sabbaticals. Compared to professional services firms you'll a) have to wait a lot longer before you're eligible for one and b) find that your sabbatical lasts a lot less time when it comes.
As the chart below shows, it's the lack of promotions that most tends to irk people in banks nowadays. By comparison (and curiously), people are actually comparatively happy with their working hours.
The categories in the chart below are as follows: Compensation (CMP), allowances & benefits (BEN), promotions (PRM), training and education (T&E), mobility (MOB), elite programs (ELT), networking (NET), mentoring (MEN), team dynamics (TDY), firm communication (COM), diversity & inclusion (D&I), community engagement (CEG), overall working hours (HRS), protected time (PRO), flexible schedules (FLX), sabbaticals (SAB) and leave entitlements (LET).
Even so, your happiness with your work-life balance might deteriorate over time. Contrary to perception, being a senior banker might not be so good after all: Quinlan found that senior bankers are less satisfied with their overall working hours than juniors or mid-rankers.