Klaus Froehlich is what the traditionalists would call a Morgan Stanley ‘lifer’, having started his investment banking career at the firm, and steadily risen up the ranks. But his career has been far from straightforward and, as he explains, making it in this sector is as much about luck as it is hard work.
How did you break into the financial services industry?
After school I went straight into a retail banking role, rather than going to university. Then, as an alternative to military service, I chose to do a social services role and so I worked in an orphanage in Latin America for a year and a half. It was only after that that I decided to go to university – at the London School of Economics – and while I was there managed to secure a summer internship at a French investment bank working in their equity capital markets team.
When that finished, they offered me a role for two days a week focusing on the German ECM market – this was in the pre-internet and Bloomberg days and they needed a German speaker to research the market there. This was great; it provided money during my studies and gave me a good insight into the investment banking industry. I managed to get a full-time role at Morgan Stanley in 2000.
What advice would you give to people trying to break into investment banking?
I would say that it pays to have an interesting and diversified CV. In my book, it’s OK to experiment and take time out to go travelling. But if all you have at the end of your time at university is one two-month internship, how do you expect to stand out from the competition? You need practical experience; there are plenty of smart people with top degrees from good schools out there, so you need to find a way of showing what else you have.
What matters most, talent or hard work?
Both, and I’d add a third – a bit of luck. You need a good degree of intelligence and talent to get ahead in any investment banking role, but if you smart and lazy you’re only going to get so far. Even if you’re clever and work hard, life is full of surprises and you will always also need a bit of luck at your side. So, I think a combination of all three is important.
Has your career been conventional or capricious?
Capricious. As I said earlier, I worked in retail banking but then did something totally different for a time before entering investment banking. But capricious can actually be helpful in your career. I think my background helped me become a more rounded individual. When you’re dealing with clients and building relationships, it’s good to have something different and interesting to talk about other than the deal you’re working on.
What tips can you offer investment bankers considering a move to the region?
Firstly, it helps to have worked in multiple locations before moving here. What’s best practice in Europe isn’t always applicable to Middle Eastern clients, and having experience of, for example, London, Hong Kong or New York and having a broader range of expertise is very useful. Secondly, don’t view it as a short term assignment – it takes time to understand the needs of clients, the way of doing business here and to develop a network of contacts. If your plan is to move here for one or two years, it’s doubtful that the experience will be particularly beneficial.
What are the major benefits of working in the Middle East? Any downsides?
The benefits are that you’re smack in the middle of the world, and therefore it’s a much more global job than, say, working in France or Germany. We’re dealing with a client base which, because of the Middle East oil wealth, has been a major exporter of capital. I deal with Hong Kong, Johannesburg, London and New York. My job is not to compete with local Middle Eastern banks, but to be part of a global delivery network for the bank.
The only downside is the heat here in the summer, but I don’t mind that too much – I prefer it to freezing cold.
It’s been a tough period for investment banking in the Middle East. Do you think it will pick up?
If you’re narrowly focused on a specific product like IPOs, then yes, your career is unlikely to have a long lifespan because the ECM market is just not producing much volume right now. But more broadly, debt issuance has been quite active over the past couple of years and there’s a decent amount of M&A activity, particularly from the sovereign wealth funds in the UAE and Qatar. There’s also a need for non-Thomson advisory services, which never really make the headlines.
What do you know now that you wish you’d know 15 years ago?
Career-wise, I am happy how things worked out so I don’t wake up in the morning feeling “I wish I had known…”. The only thing I do wish is that I’d anticipated the stock market cycle and the property market better (particularly in Dubai!). When you work hard, you rarely find time to become a savvy private investor.
Imagine I want to work for you, what three qualities could I exhibit that would make you hire me?
Hard work, talent and honesty. It’s a very competitive environment, clients expect solutions to complicated problems and you have to put the work in. Talent, because I find people who are naturally smart can generally apply their hard work more effectively. Honesty is extremely important, particularly if there’s bad news involved. If you’re hiding something and get caught out, it’s not something I want to see.
What is a surefire way NOT to get hired by you?
Again, being dishonest – on some occasions I’ve stopped the interview when someone is clearly not being straight with me. For example, if there’s a gap on your CV because your got made redundant, don’t try and bluff with some explanation like “I left because I didn’t see it working out” or “I wanted to take time out”. In the current climate, a lot of people have been laid off, and I’d rather they were honest. Explaining the situation wins brownie points in my book, and if you can’t be honest in an interview, there’s every chance you can’t be in your day to day working life.
You’ve been with Morgan Stanley for 12 years, what’s the secret to progressing within one bank?
Patience. When people join an investment bank they immediately want to reach for the sky, but the fact is that it takes hard work and patience to advance your career. Investment banking is a cyclical industry; there will be times when firms are expanding and opportunities are plentiful and more lean times. If someone has been stuck at VP for a period of time and thinks they should have made it to director level, it’s tempting to throw in the towel or move to another company.
However, if you’re in the same bank, you have a much better network, more efficient workflow and, ultimately better productivity. If you know how things work, you don’t waste time learning the process. Also, every time you move firms, you’re reinventing the wheel – getting to grips with new processes, developing new networks and working harder and harder to prove yourself. It doesn’t make for much of a work-life balance.