back to notes

Goldman juniors

Nov. 9, 2013 |The Financial Times p16.|

Hotshot university grads should not worry that Goldman Sachs' plan to cut back the hours of junior bankers is just a ruse. They should worry that it's for real.

Goldman's motives are not limited to newfound humanity. Given its position in Wall Street's pecking order, its fledgling financiers, after being immersed in the ins and out of high finance, have been highly sought out by hedge funds and private equity firms, where the remuneration and the lifestyle are often better.

A few gruelling years was a net present value positive trade for bright young things. But at a time when bank jobs come with less prestige, less stock options, and less ping pong than gigs at hot tech start-ups, the continuous loss of talent has become untenable for Goldman and its peers.

Yet the worst choice a student could make, after working a humane schedule of "just" 80 hours a week for a few years, would be to get sucked into another year, and another. At $250,000 a year, inertia is easy, if your life isn't utter misery.

The legacy two-year junior analyst sprint was always about learning as much as possible - spreadsheets, the nuts and bolts of business models, how to work under extreme pressure with both the guy in the copy centre and the client CEO - and then hitting the eject button. Armed with those skills, analysts could go start a company or become an investor (the truly lucky ones should write for a newspaper). Why let all those skills go to waste by staying at a dreary bank, when you are in your 20s, and the world is your oyster.

The good news is that brutality on Wall Street is a natural law that will prove hard to change. There are these peculiar creatures called clients, who pay Goldman a lot of money to take their calls at all hours, seven days a week.

If Goldman does not pick up, Morgan Stanley or JPMorgan will (and give precisely the same service as Goldman). Demanding clients lead to demanding managing directors, demanding vice-presidents and so on. So worry not, eager analyst: your first two years will be plenty educational and painful enough to point you towards a proper job.