What I hear is that revenue is at record levels, deal flow is so high they can't keep things staffed and are pulling in junior bankers from lower tier shops. Bonuses were reportedly bad(in spite of record revenue) because of the 'optics of bankers getting big bonuses during covid' which sort of breaks the bargain of working 90-100 hours a week.
I'm shocked at the attrition I've heard of. For being such a high barrier to entry club(MBA, lots of 'networking', a hazing summer analyst/associateism, etc) people are bailing in crazy numbers. I am aware of a group(an incredibly high performing group, tons of deals, tons of S-1s that hit HN this year) where 80% of 2nd year associates have already left(since the cohort started).
Everyone knows that "bankers work a lot" but even among a friend group of MBB consultants, medical residents, buy side folks, etc -- the bankers have it the worst, and the comp is not really better unless you stick it out a long time.
I suppose they'll always find a new batch of people willing to imagine that they're getting a taste of billion-dollar deals and retire early. People undergo hazing because there are lots of people who want to be in the club. You may not be able to profit off the numbers, but you can at least have a perverse fun, if that's your thing.
But somehow, I'd have thought that a bank with "Come work 45 hour weeks with us for the same amount of money" would attract smart people and use their brain power to make more money.
A large majority of the work that these people are staffed on is either time sensitive proposal work, preparing to pitch Acme Widgets on why Our Bank should Lead Their Deal(which bankers call 'bake offs'), or actual live deals(if your bank won the work). So if you are a junior, a lot of it is event driven, you respond to emails, edit requests(of decks, the model, etc), you are available for the client(which is usually CEO, CFO, etc) basically all the time. These things run a lot leaner than I expected, like, the group involved in orchestrating the prepping of a a filing(basically project managing dependencies with legal etc) is not tons of people, and only a few of them "own" the various big moving pieces. The work is not complex in the sense that cutting edge engineering might be(it isn't quant stuff), it is fairly simple mathematically(in the same way as accounting), but the skills of a banker are more attention to detail, dealing with clients, enduring a lot of suffering, formatting decks, etc.
Additionally -- these systems aren't that sophisticated(in a Software Maturity sense, they are obviously sophisticated financial tools), models are xslx workbooks that are sent around or uploaded to shared file systems, etc. (Aside: if someone could build github for bankers...) I am told the work is hard to split because one person is DRI for model, etc, and they just own it through the process. It is pretty shocking/cool(or scary?) how few people and how junior they are underlying "Big Deals" e.g. major IPOs. A lot of times you'll have like, an associate(1-3 years out of an MBA, usually no banking before) + an analyst(1-2 years out of undergrad) largely running a deal with the supervision of someone higher up, a VP or ED, and then a Managing Director(the banking equiv of "partner" though most of the banks aren't actually partnerships anymore) who is the 'face' and won the deal and communicates at a high level with the clients. Obviously they fan out to specialized back office depts that do stuff like underwriting, risk, legalese(securities are after all contracts), etc.
I've heard from some people in PE at big funds that are known to run super lean(like, 3 people running a big deal) that they do it on purpose as a philosophical choice to make more money(bigger pie, fewer slices), but the big banks are not afaik like that.
I think traditionally junior bankers spent a ton of time waiting in the office for someone to drop something on them late at night, which covid has improved because everyone can live their life at home if they are waiting -- but the market is so hot that people are just staffed on more deals and deals are staffed with fewer people.
These people do get a lot of experience really fast, and they do get a pedigree that lets them get hired at better opportunities(either money wise or balance wise or both), but it sucks hard and the banks don't really try to hide it e.g. the "Protected Weekend" where you are supposed to _really_ get a weekend off once a month is a pretty new thing.
The other thing that sort of shocks me to hear is that even if you stick it out and make MD, it still sucks. You make a lot more money, but you are still on calls at 11pm on weekends all the time.
Matt Levine has a more eloquent response to this in today's money stuff.
"The point of being an investment-banking analyst is to develop, through endless miserable repetition, a muscle memory for certain core skills. One of those skills — surely the least useful, but also the most salient — is formatting presentations. The other ones are, like, building financial models, talking confidently in meetings after limited hasty prep, etc., basic building-block skills of financial analysis that will serve former investment bankers well in a variety of future jobs. (Mostly private equity but still.) The presentation-formatting thing is totally dumb, but it is an easily legible signal, a brown M&M test of investment banking preparation. If you just automatically and instinctively build a properly formatted PowerPoint deck for everything,[2] people will trust you to build a leveraged buyout model or run due diligence on an acquisition. I’m sorry these analysts are sad and planning to leave Goldman, but at least they will leave with marketable skills."
That said what is it that these entry level bankers actually do for 100 hours a week?
Some very serious survey results in there. It's apparently a very small sample size (13 first years), but life sounds like absolute hell for those 13.
At least analysts can bail to the buy side and have a +EV path out.
London folks have it way worse too, I hear. Same jobs, 60% of comp, London isn't cheaper than NY.
The obvious answer is that it wouldn't work, but some of these organizations with long hours are some of the best performing organizations, so there is definitely more to the story.
Here’s the original post/actual deck.
