Morning Coffee: The latest way to retire from banking before you're 40. Scourge of the hedge fund babes

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Retire from banking before you're 40

If you've focused your career on maximizing your earnings in order to hasten the time when you're able to remain in bed until 8.30am daily and devote yourself to pursuits of your choice, it seems you've been doing it wrong. The new-new thing is not chasing the world's biggest bonuses in order to retire young: it is spending as little money as possible.

So says the New York Times, which details the spread of the 'FIRE' (financial independence, retire early) movement. The NYT details 43 year-olds and 38 year-olds who were earning $110k and $150k a year respectively. After cutting their spending to the bare minimum, saving up to 70% of their incomes, and leaving expensive cities to live in cheaper rural areas, they've stopped working and are taking it easy.

"I made the right decision, this is the life," says one FIRE adherent who formerly worked days of, "12- or 14-hour shifts where I didn’t use the restroom, where I didn’t eat, because so much work was piled up on me.” Another says,  "I was almost a slave to my job because of the way we were living." Another decided to get out young after seeing a colleague who collapsed at his desk taken away in ambulance after working 14 hour days.

Of course, retiring at 40 means you're going to take a lifestyle hit. One of the NYT's FIRE exponents is supporting is family on $40k a year, shopping at Costco, and fixing his own car. Some take part-time barista jobs at Starbucks for the health insurance. However, the upside of saving 70% of what you earn while you're earning it is that your lifestyle was probably never especially lavish anyway.

None of the NYT's examples are ex-bankers, but plenty people who've worked in finance will sympathize with the impulse to dial-down on work. The finance industry has its own early retirement enthusiast in the form of Khe Hy, Blackrock's former head of hedge fund research, who retired aged 35 and is now a blogger, coach, and healthy-living evangelist. "I feel very different. Being out of finance has given me a completely different perspective on the life I want to live," Hy told us when we spoke to him two years ago.

FIRE is only possible if you can avoid spending money as you earn it. This isn't always possible if you're working at a relentless banking job in a major financial city. As one associate complained recently on Wall Street Oasis: "I spend it in a vicious cycle. I pay exorbitant rent in order to stay in a city that is a financial capital, so that I can work in finance, so that I can pay rent to live in a city that is a financial capital. Repeat, in a cycle, until insanity or hilarity ensues." And ex-Goldman Sachs associate Mai Le wrote here in July, many junior bankers spend everything and have less than £500 ($646) in savings.

To a degree, FIRE may go against the motivation to work in banking and live life in the fast (spending) lane. Some of the NYT's exemplars express regret for the loss of fripperies like nice cars. Most seem to think their decision was worth it. "A friend of mine said the sense of dread from my face was gone," says one, who now spends his time solving Rubiks cubes, cooking, reading and volunteering instead of earning money.

Separately (and we're late with this), the Wall Street Journal had a piece last week echoing what we've been saying for years: that the finance industry has a propensity for hiring beautiful women and putting them into sales roles.

The WSJ says hedge funds are especially guilty of recruiting ex-cheerleaders and winners of beauty pageants into marketing roles where they'll be chatting-up investors. It's a trend that irks qualified women who feel sidelined as a result.  “The whole mind-set is: There’s this gorgeous babe at home, and I’m going to have this gorgeous babe in the office, because what does that say about me? I’m surrounded by gorgeous babes,” complains one. 

Meanwhile:

Tadhg Flood, who is 46 years old and had been with Deutsche Bank for 16 years in London, latterly as co-head of the FIG team, is joining Centerview. (Wall Street Journal) 

12 out of 45 managing directors in Wells Fargo's wealth management division are women. They're fed up with being told things like they should be at home looking after their children. (Wall Street Journal)

Nearly 5,000 people now work for asset management firms in Luxembourg. (Financial Times) 

Credit Suisse made Bruno Hallak, whom it hired from Deutsche Bank in September 2017, head of investment banking and capital markets in France. The memo accompanying his appointment said that Hallak will take responsibility for "accelerating growth" and that Credit Suisse will, "continue to build up our presence in this highly strategic market by promoting internally, attracting top talent... and investing in the business.” (Financial News) 

Credit Suisse CEO Tidjane Thiam said there's been a drop-off in client activity since the start of the third quarter. (Reuters) 

Activist investor Edward Bramson discerns a softening in Barclays' board: “It is our sense that the board does recognise the company’s continuing low valuation and that the current approach to remedying it is not proving to be successful. ” (The Times) 

James Milligan, Nomura's EMEA head of flow credit, has left the bank. (Reuters) 

How to speak corporate American:

Don't say: "a chain of coffee shops"

Do say: "a scalable coffee platform with critical know-how and expertise in a fast-growing, on-trend category."https://t.co/mU3tQIBOSl

— Peter Thal Larsen (@peter_tl) August 31, 2018

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