“You are basically hiring yourself. This is not an objective process.” That’s what one recruiting lead at an investment bank told Northwestern University researchers back in 2013. The study found that nearly 70% of interviewers at banks considered the rather opaque measurement of “cultural fit” to be the most important factor when assessing a candidate. The end result has been a lack of diversity among junior bankers, but not necessarily when in comes to race or gender. Every firm now tracks traditional diversity metrics and often hits them, at least at the entry-level. Inequality by parental social class – whether a person grew up rich or poor – remains a significant bias when it comes to junior hiring at investment banks, according to the research. Fast-forward several years and current and former bank employees don’t think much has changed, though some believe the affluence bias now runs both ways.
“I always felt like the odd one out,” said a former analyst at a tier-one bank in New York who attended an Ivy League university on scholarship. “The conversations people were having – the things they did on weekends or vacations, where they could afford to live in the city – I could never relate.” He found it difficult making work friends and acknowledged that he quickly developed a chip on his shoulder, further distancing himself from other young bankers at the firm. “I remember one conversation about people taking ski trips to Europe. We were making [$75k] in the most expensive city in the world. I was worried about paying rent.”
A current managing director who worked through the financial crisis in 2008 said he believes times have changed in recent years as banks have become leaner. “No one is hiring their friend’s kid anymore, unless they’re fully qualified.” In fact, he says some managers have gone the other way, bringing in “hungrier” analysts without a financial safety net who may be more willing to put in the hours.
The research backs up this possibility. Another hiring manager said she passed on a candidate who met the grade threshold and had relevant work experience because he didn’t appear to fit the firm’s “scrappy” culture. “I’m looking at the interests [on his resume] – lacrosse, squash, crew [laughs]. I’m sort of giving him a personality type here, and I don’t think he’s going to fit in well here…we’re more rough and tumble.”
Common sense says that the advantage still clearly lies with children of affluent parents. They are more likely to attend target schools and have better insight into opportunities in banking, along with the network and financial flexibility to find and accept low-paying internships during their first two years at university. But there is one particular area in banking where this may not be the case: technology.
A former developer at a New York bank who just left to join Google said that he couldn’t remember a single tech colleague who he considered “a rich kid,” with more talk of student loans than ski trips to Gstaad. The job “is about what you know, not who you know,” he said. And “no one gives a sh*t where you came from or what your parents do.”
While engineers have taken on a more prominent role at investment banks – including as revenue-generating quant traders – the relationship between tech staff and traditional bankers is still lousy, he said, alluding to the fact that the two tend to have different socio-economic backgrounds – or at least that was feeling amongst his peers.
“We were always kind of looked down upon as part of the back office,” he said. “It very much felt like the rich kids versus the poor kids,” even as their profile within the industry improved, he said, referencing the classic 80s movie The Outsiders, which pitted working class high schoolers against wealthy students. He said there was basically no social interaction outside of work between young investment banking analysts and anyone in his group.
Perhaps fittingly, the former investment banker who was on scholarship left to join a small tech company. He said he doesn’t miss his old co-workers.
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