Get your free copy of Editor’s Digest
FT editor Roula Khalaf picks her favourite stories in this weekly newsletter.
On message boards such as Wall Street Oasis and Reddit, junior investment bank analysts have been posting complaints about the long hours and the impact they are having on their mental and physical health, and are calling for better support from their employers.
These demands have come under renewed scrutiny following the sudden death of an associate-rank banker at Bank of America in March. The employee, a U.S. Special Forces veteran, whose tragic death has not yet been specifically linked to overwork, though news reports have suggested he had been working grueling 100-hour weeks prior to his death.
These frustrations are inextricably linked to what’s happening at the top of the food chain, where partners and managing directors are also under increasing pressure to take on more work that keeps more junior staff in the office overnight and on weekends.
The pressures may not garner much sympathy for these high-ranking financiers, who can make millions. But some bankers say their seemingly glamorous jobs, full of jet-setting and boardroom machinations, have turned into more arduous work than ever before, with employers demanding higher fees while being less patient than ever if they fall short of annual targets.
With that sword hanging over their heads, there seems to be little choice but to force everyone below them to try harder, and companies can only hope to avoid a bad incident that would garner news headlines and tarnish the impression that Wall Street has become a kinder, gentler professional force in the modern era.
Three years ago, during the pandemic’s record trading, investment bank analysts complained they were overworked and their bosses were not considerate. After a backlash, they won big pay raises, new perks and more aggressive efforts to monitor and limit their work hours, among other safeguards that were said to prevent burnout.
The deals have disappeared, but frustration is back. With fewer initial public offerings and merger and acquisition activity, senior bankers are doing more selling. To track their diligence, banks are turning to various kinds of customer relationship management software. Some even tally up email activity, calendar entries and phone calls, said one senior banker.
“A lot of time goes into presentations and PowerPoint work and spreading the word about your competitors. [typing company financial data into spreadsheets] “I would also like to see data on the number of proposals and orders received per year,” said one investment banking analyst who questioned the effectiveness of marketing efforts.
Some bank CEOs are already thinking about how to deploy AI to reduce costs and workload, but making a consistently good impression on customers remains a priority, even if certain sales pitches aren’t all that useful. Customer loyalty is at an all-time low, calling for more salesmanship, said one veteran banker at a Fortune 500 company.
Another former banker turned corporate executive said the industry remains highly competitive despite the disappearance of banks such as Credit Suisse and Lehman Brothers. Apart from the rise of boutique banks, perennial losers such as Wells Fargo & Co. have also cultivated reliable transaction-broking arms.
At the same time, large corporations themselves are developing their own sophisticated in-house teams that can perform the financial analysis previously performed by external bankers, reducing the need for external bankers.
Boutique firms are increasingly promising their managing directors a fixed bonus or a percentage of annual profits as a way of incentivising them to work as hard as they can.Many of the larger boutique firms are also publicly traded, and they set specific annual margin and growth targets that they need to keep public shareholders happy and their share prices high.
The management challenge is clear: how to maximise results while ensuring the underlying systems don’t break down. The chief executive of one boutique bank acknowledged that banks had overhired during the turmoil of 2021, and that many hadn’t had the “tough conversations” to tell laggards that they weren’t good enough to stay in managing director roles.
Recently retired bankers did not believe that tensions in the incentive system between junior and senior bankers could be easily resolved.Typical investment banking executives and group heads are promoted to their positions without demonstrating any management ability or interest in talent.
“The people who generate the most revenue are terrible managers,” he said. “That’s a real problem. A lot of people don’t have the empathy, the listening skills, those kinds of skills.”
email address
