Is your investment banking career for life, or just for an intense period of your mid-20s and early 30s? What are the signs that you should be preparing for a future adrift from the banking sector - if not now, then in five years' time?
Banking has always been a turbulent career, but as the industry adapts to the kind of landscape laid out in Morgan Stanley's report on the future of banking, positioning has never been more important. If you agree with any of the statements below, you may want to alter your orientation while you still can.
If you want to endure in banking now, you need to know your technology. This is where the future lies.
Take Barclays: CEO Anthony Jenkins has said that banking is in the midst of a 'technical revolution.' Barclays is automating as many processes in the investment bank as possible. Along with HSBC and UBS, it's also setting up its own financial technology (fintech) accelerator to sponsor the growing fintech sector. Unsurprisingly, fintech start-ups are thriving.
Banks have become more political. In the past, a tide of rising revenues lifted the careers of a lot of people. Now that revenues are increasing more slowly - if at all - success more often comes from politicking and playing the system.
"When growth goes out of the industry - as it has in the past seven years, you can't elbow your way to the top table just by dint of your success," says one investment banking headhunter, speaking on condition of anonymity. "You have to play the system and you have to work your way up through the bureaucracy."
At the same time, in investment banking divisions (IBD) at least, relationships are still king. But those relationships are different to in the past - as a senior relationship person in an investment bank your primary responsibility is to sell the financing and advisory capabilities of the bank employing you - not to offer impartial advice to your clients. "It's only about cross-selling, cross-selling and cross-selling," says the headhunter. This is one reason why senior advisory bankers are still quitting for boutiques.
As we've noted before, VP and director jobs have become the worst places to be in a bank. Now that promotions are harder to come by, mid-level bankers are getting stuck in these positions for years. It's increasingly likely that your banking career will stall, or end, in your mid-30s.
"It's hard, only three or four people from director classes of 40 or 50 are getting promoted," says the headhunter. "It's worse for the mid-level people who put in the hard work as analysts and associates in the expectation that they'd make big money, and are now stuck," observes one veteran equity researcher.
The MBA students who get jobs in banks now are, "committed," says Richard Bland, head of employer engagement t London Business School. They know that they want to work in banking, know what it involves, and are prepared to work as hard as necessary, he adds. Many also have prior banking experience.
As Deutsche Bank's big HR report confirmed yesterday, banking now is all about talking the talk. And the talk is all about changing the culture. Colin Fan, the co-chief executive of Deutsche's investment bank has warned his staff against committing vulgarities. This is being backed up by HR: yesterday's report says Deutsche is "living a new culture", it's effecting "cultural change" and senior staff must become "culture carriers," who will propagate the new cultural values across the firm. In this environment, there's less room for superstars.
Whereas banks in the past were prepared to tolerate superstars if they brought in revenues, this is no longer the case. "The people who succeed now are a bit bland" says one headhunter. They keep their heads down. They don't ruffle feathers. They play politics (see 2).
Deutsche is shunting jobs to low cost centres. So is Goldman Sachs. In the new wave of off-shoring and near-shoring it's not just technology jobs that are being moved away from the big financial cities. - Deutsche is creating a full 270 person trading floor in Britain's Birmingham. From there, it will serve 'low touch customers' who don't need a lot of maintenance. If you're a sales trader who works with hedge funds, you should be fine. If you work with small corporate clients who are happy to access markets directly, your probably won't be.
Capital-intensive banking jobs are on the way out. Every firm is cutting the amount of capital devoted to its investment bank. If you work in a capital-intensive area of banking, you can expect to go the way of correlation traders past.
Generating big revenues, or even big profits, and being a star player are no longer passes to big money in banking. As banks spend more on regulation and controls, front office bankers must acknowledge the importance of the banks' infrastructure in enabling their success. A sense of entitlement based upon individual P&L is no longer appropriate. Accept that now.