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If you’re applying for a technology job in an investment bank, you’ve probably thought of working with the systems that support banks’ sales and trading activities. After all, this is where the highest paid jobs with the greatest exposure to the “front office” are, even though some technologists say they’re best avoided.

Before stepping into an interview for a front office tech job, however, you might want to know exactly what the trading systems do. In this respect, a new report from Greenwich Associates is helpful. Titled, ‘The Technology to Succeed in Fixed Income Trading,” it spends most of its time describing how fixed income trading tech systems function. These are the salient points…

1. As machines take over trading floors, human traders are being supplemented by various types of technology

Human beings are not disappearing from trading floors: they’re just being jazzed up a bit. As “electronification” of trading proceeds apace, Greenwich says there are three key types of technology used to help humans in fixed income trading: autoquoting, real-time pricing systems and low touch hedging tools.

2. Complex algorithms now provide clients with pricing information

Under so-called request for quote trading, clients effectively ask dealing desks in banks to quote prices for particular trades. While traders used to give prices over the telephone, a large portion of RFQs are now handled by so-called “autoquoting systems”.

These systems use mathematical algorithms to generate prices. Before coming up with a price (often in a matter of milliseconds) these algorithms look at public and private data about the security being traded, and add in information from the chart below, including information about the trading counterparty (the client being traded with) and current market conditions. Pricing algorithms also need to take into consideration the dealer’s current exposure to the market to ensure the trade won’t lead to the risk of a big loss. – If a client is a huge buyer, for example, the bank might quote a high price and back off.

As clients demand firm pricing, Greenwich says pricing algorithms are increasingly important source of competitive advantage – and that dealers are increasingly investing in them: “If done properly, such an algorithm connected to the right distribution technology will put the bank ahead of its peers with better pricing, higher margins and reduced risk.”

3. “Internalization engines” are now used to help banks hedge trades

Once upon a time, Greenwich says traders were tasked with hedging (mitigating) the risk associated with their trading activities. To do this, they’d usually either find a customer to take the opposite side of the trade or an inter-dealer broker to pass the risk onto a competitor.

Not any more.

Nowadays, hedging is done via so-called “internalization engines.” These are a sort of internal search engine which looks across a bank’s trades and tries to find ones which will offset the risk that’s been taken on with the new transaction. For example, Greenwich says that if the mortgage desk in New York is looking to buy U.S. Treasuries to adjust the duration of their portfolio, and a corporate customer of the rates desk in London is looking to sell U.S. Treasuries to raise cash, the internalization engine will flag that match and execute the trade.

Greenwich notes that internalization is a big thing for big banks which have all kinds of diverse activities. In future, however, it suggests that smaller banks could club together to create their own internalization pools spread across members of the group (although this would surely raise all sorts of issues about risk sharing).

4. Sometimes internalization engines don’t work though

Although internalization engines are now the go-to hedging systems for big banks, Greenwich notes that they’re not always enough. When an internalization engine can’t find the right matching trade, the bank still has to hedge on the broader market. And this requires another kind of pricing technology.

In this instance, Greenwich says dealers look at “aggregated liquidity streams.” These come both from other peers and so-called “non-bank liquidity providers” like Virtu or Sun Trading. This technology steams prices and puts the banks at the receiving end. If the bank still can’t find an appropriate hedging trade, it will go to anonymous market venues like NEX Group’s BrokerTec and Nasdaq’s eSpeed. Greenwich notes that trading here is, “exchange-like, with anonymous trading and prices on the screen that are immediately executable.” These are seen as a last-resort option.

5. In future, more hedging will take place through derivatives markets

Greenwich notes that today’s internalization engines and aggregate liquidity streams don’t make as much use of futures and options as they ought to. “Market impact, liquidity, fees, and capital impacts should all be used to execute the most efficient offsetting trade, regardless of whether it is a credit default swap, ETF or Eurodollar future at the CME,” says Greenwich. Right now, systems can’t really do this.

6. You don’t need to work in a trading technology team at a bank to work in trading tech

Lastly, Greenwich notes that banks are increasingly buying trading technology systems “off the shelf” from vendor companies. 80% of equity investors now use an execution management system (EMS) provided by a third party. Something similar is coming to the world of fixed income trading.

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If you want to adorn yourself with desirable qualifications and valuable knowledge of the sort that leading banks are desperate to find now, you want to avoid doing an MBA and probably even a Masters in Finance. The most sought-after of today’s students are those who’ve studied machine learning.

As we reported yesterday, J.P. Morgan is looking for PhDs with expertise in machine learning to build algorithms that can analyze large data sets. Goldman Sachs is currently hiring a machine learning and data science engineer to, “crunch billions of data points each day to inform firm-wide market insights and strategies.” And Google…. Google is all about machine learning these days.

A long article in Wired outlines Google’s machine learning evangelism. Although Google’s been running machine learning classes for its employees since 2005, its proselytizing on the subject has recently gone through the roof. Right now, only 10% of Google’s 25,000 engineers are familiar with machine learning; in future it wants them all to be. To this end, it’s just opened a new machine learning lab in Zurich and has seats to fill.

And where does Google go when it wants the best machine learning students in the world? Seemingly to Pedro Domingos, a professor of machine learning at the University of Washington who’s authored a book called the “Master Algorithm.” “My students, no matter who, always get an offer from Google,” Domingos tells Wired. Helpfully, he’s posted his machine learning classes on Youtube, although we suspect that studying them there won’t have quite the same affect.

People who succeed in machine learning aren’t quite the same as traditional coders. Wired suggests old-school coders are control freaks who like to build a universe in which they are supreme. Masters of machine learning are more creative and experimental and mathematical. “It’s a discipline really of doing experimentation with the different algorithms, or about which sets of training data work really well for your use case,” says John Giannandrea, Google’s key promoter of machine learning. “The computer science part doesn’t go away. But there is more of a focus on mathematics and statistics and less of a focus on writing half a million lines of code.”

Separately, Business Insider has assembled a long and impressive list of the top under 35 year-olds in finance. Everyone on it is enough to inspire feelings of inadequacy, but none more so than Razzy Ghomeshi, whom aged just 28 is the head of investment grade trading at RBC Capital Markets in the U.S.

Meanwhile:

You probably don’t want to work in trading for a European bank in Europe when MiFID II trading rules come in next year: their revenue growth is expected to slow considerably, with Deutsche Bank the worst affected. (Bloomberg)

Goldman Sachs leased some new office space in Frankfurt’s financial district. (Bloomberg)

Frankfurt’s housing market could go the same way as London’s. Rents have already risen 50% since 2006 and are expected to rise further still as bankers descend. (Bloomberg)

Fidelity’s adding 250 staff in Dublin. (Financial News)

13 banks have now selected Frankfurt or Berlin as their new EU hub. 12 have selected Dublin. (Financial Times)

Private credit funds are the place to be. They managed about $600bn at the end of last year.That figure could grow to $1tn by 2020. (Financial Times)

You might also want to consider working for fast growing messaging company Symphony Communications, which aspires to take over from Bloomberg. It now has 230,000 users, up from 220,000 a month ago. (SCMP)

Symphony’s CEO confesses to driving colleagues crazy. (Business Insider)

Irrepressible Scaramucci: “” have a huge opportunity ahead of me. I don’t know what it is exactly, but it’ll be huge.” (Vice)

If you sleep less than eight or nine hours a night, you will die young. (Financial Times)

Never all Byron Trott a, “chubby boy.” (Business Insider)

Study finds a lot of MBA graduates end up in mid-level positions where median pay is $124k. This isn’t great given that you need to make a gross salary premium of $30k a year for 10 years just to recoup the cost of investing in the course. (Financial Times)

Children today are better at delaying gratification than previous generations. (BPS)

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The quant hedge fund spun out by the systematic trading prop trading team at Barclays two years ago, has nearly doubled staff and massively hiked up compensation for its London operation over the past year.

Squarepoint Capital, one of the most buzzed about hedge funds launched in 2015 after a team of around 60 quants and systematic traders within Barclays’ nQuants team spun out of the bank to go it alone, increased its London headcount by 95% over the course of 2016, according to newly released accounts.

It had 45 people at the end of last year, up from 23 in 2015 and has been paying them more. On an average pay per head basis, Squarepoint paid £311.6k last year, compared to £210k in 2015. Its partners have been bringing in more money – they made an average profit of £659.6k last year, up from £603.4k for the previous period.

There’s a downside to hiring so many staff – a big uptick in costs. Squarepoint spent over £14m on its employees last year (£10m more than 2015) and despite an uptick in revenues, its profits fell from £9.5m in 2015 to £5.6m last year.

Barclays inherited the nQuants team after it bought Lehman Brothers’ U.S. business in 2008. It was founded in 2000 by Olivier Durantel and Gregoire Schneider, who remain in senior roles at Squarepoint. The firm has offices in London, Singapore, New York, Geneva, Zug, Paris and Montreal.

In London, Squarepoint’s EMEA chief investment officer is former Barclays systematic trader Pierre-Adrien Nicolas, while ex-Barclays quants Thibaut Bondoux, Clement Larrecq, Charles Caverne and Salim Louzgani all occupy senior roles in the UK.

Last year, one of the more significant hires was Rahil Iqbal, who joined as a quantitative researcher from J.P. Morgan where he was head of EMEA index strategy.

More recently, Squarepoint has been competing for talent with large investment banks and big-hitting hedge funds. Nathan Benabou joined from J.P. Morgan’s quant team in April as a systematic trader, Oleg Bogoslvskiy came from KCG Holdings and quant researcher Bruno DeCourt joined from Citadel.

Squarepoint doesn’t appear to have finished recruiting. Currently it has roles for senior quant researchers across long term equity, high performance and price action stat divisions within all its office locations.

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There are many reasons to work for a Big Four accounting firm (ie. Deloitte, PWC, EY or KPMG).

Chief among them is the fact that they hire literally huge numbers of people. In 2017, for example, Deloitte alone recruited 70,000 “new professionals” – one hire every eight minutes. Hiring in investment banks is modest by comparison: Goldman Sachs, for example only employs 34,400 people in total and it ended last year with 400 fewer staff than it began.

How do you get one of these plentiful jobs with the Big Four though? And – given that are still 18 applications to every available graduate job at Big Four firms (in the UK), which jobs are easiest to achieve?

Based on the newly released reports from Deloitte and PWC, here’s how to target your Big Four application for maximum effect.

1. Apply as a “client service” professional

As the chart below shows, most of the people who work for PWC are actually out there servicing clients: support staff and partners comprise a tiny proportion of the total headcount.

Moreover, these client service jobs are where the growth is. Overall headcount is up 13.5% at PWC in the past two years, but for client service professionals it’s up 15%. By comparison, PWC’s number of practice support staff have only gone up 9% in the same period.

The muted growth in support staff hiring is in direct contrast to investment banks – which have been loading on with middle and back office staff in areas like compliance and technology to deal with regulatory requirements and cutting back on client facing people in the process.

The thing to remember though, is that client facing professionals at Big Four firms are probably working in areas like compliance and technology – and are selling their services into banks…. (hence the growth). Support staff in banks are client facing staff in the Big Four.

2. Apply in Asia

Asia is where the job growth is in the Big Four. At Deloitte, Asian revenues rose the fastest last year and employee numbers grew to match. There was a similar trend at PWC, where – if you’re not applying in Asia – you might want to apply in Europe.

3. Apply in “risk advisory” or consulting – not audit

Audit and assurance still form the backbone of revenues at Big Four firms. At PWC UK, for example, 36% of revenues were generated by the assurance division in 2017. But, putting together the accounts for large corporations isn’t where the growth is at Big Four firms.

The growth – as the chart below for Deloitte Global shows, is now in areas like risk advisory and consulting.

What does this mean? Deloitte defines risk advisory as things like, “cyber, and innovative solutions in the areas of robotic process automation, risk sensing, and predictive analytics.” Consulting is all about helping clients “accelerate business model transformation” through “strategic acquisitions, alliances and investments in areas such as artificial intelligence, robotics, cognitive, creative digital consulting, cloud computing, blockchain and Internet of Things (IoT).”

It’s not just Deloitte. PWC doesn’t provide global figures for its revenue growth by division, but in the UK (where it does), consulting revenues are also rising faster than the rest.

Old-fashioned audit is pretty boring and staid by comparison.

4. Join either as a graduate or as an “experienced professional”

If you’re trying to get into an investment bank, your best bet is to join as a graduate. Although banks will sometimes hire people from industry into their equity research or M&A teams, it’s not normal for them to do so.

By comparison, as the chart below shows, Big Four firms like PWC hire both graduates and experienced professionals. – You can get a job in the Big Four once you’ve spent a few years working elsewhere; they want industry knowledge.

5. Specialize in the financial services industry

When the Big Four hire experienced professionals from industry, they’re looking for people who have experience of the industries where their clients are located. And guess what – a lot of their clients are banks and financial services firms.

As the chart below shows, financial services clients are PWC’s number one segment globally. If you’ve spent a few years in risk or technology with a bank, PWC would probably very much like to hear from you.

6.Don’t be privately educated

While banks have a well-documented tendency to hire middle class students, accounting firms are doing their best to hire from across the social spectrum.

PWC, for example, has a ‘social mobility team leader’ and 74% of its UK graduate hires were state school educated last year. It also monitors the proportion of people it hires from families receiving income support (14%) or who received free school meals (10%).

7. Moderate your pay expectations

Lastly, it’s no good applying to a Big Four firm which banking-style pay aspirations. The chart below shows average pay at PWC and Goldman Sachs in the UK. Basically, PWC pays a lot less. This changes if you make it to partner level, but for that you’ll also need luck and patience, and even then you won’t earn much more than the average person at GS.

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Photo credit: Numbered by ChristopherTitzer is licensed under CC BY 2.0.

Three Credit Suisse heavy-hitters have left the bank to launch a new consultancy to help investment banks with everything from planning for Brexit to hiring the best staff.

David Long, who held various senior positions at Credit Suisse during his 25 years at the bank, has formed Pall Mall Risk Reduction with two other former colleagues who have also held chief operating officer roles at Credit Suisse.

Long was latterly head of strategic initiatives at Credit Suisse, a role that involved planning for its business model after the Brexit vote. He was also previously group chief operating officer (COO) for its EMEA operation.

Also heading up the new company is Nick Wilcock, who was latterly COO for northern Europe within Credit Suisse’s investment bank and also president of its Moscow office during his 30 years at the bank, and Charanpal Matharu, who spent 13 years at Credit Suisse most recently as a COO within its investment banking controls team.

Our attempts to contact Long were not successful, but the firm describes itself as a “COO practice” seeking to help banks to reduce operational and conduct risk. It offers a broad range of services including helping investment banks plan for the impact of Brexit, training and managing employees, technology management and helping investment banks with burdensome regulations. They are also engaged in ‘strategic advisory’ work – which could mean cost-cutting and redundancy programmes within the investment banks.

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It’s not easy to find exceptional 20-somethings to join a hedge fund nowadays. Admittedly, Steve Cohen’s Point72 isn’t strictly a hedge fund (it’s a family office managing Cohen’s own money), but it suffers from this problem all the same. Last year Cohen publicly bemoaned the lack of decent talent. Since then, Point72 has ramped-up a machine-learning program to try automating trading decisions, while its Academy – which trains up its juniors, has set about attracting more fish into its hiring pond.

The Academy wants more women. It’s just launched a $20k scholarship for women in the sophomore year of U.S. university courses. Female students have until October 20th to apply and must do so alongside an application for Point72’s New York City summer intern program.

Jonathan Jones, Point72’s head of investment talent development, says the applicant pool for the Academy has typically been 70% to 75% male, and the fund wanted to do something about it.”Our objective is to be the destination of choice for the brightest talent in the industry,” says Jones. “It was important for us to seek to expand our appeal to women specifically. You could argue that one of the afflictions our industry has in general is sameness or group-think: too many people of similar backgrounds.”

Point72 has senior female role models on its staff already. Its macro trading business is run by a woman. So its investor relations business. So is the Academy itself.

Ultimately, Jones says the Academy wouldn’t mind having 50% of its Academy recruits as women (rather like Evercore’s UK analyst program). However, he admits it’s not easy to find this proportion of women in hedge funds’ traditionally preferred academic disciplines of finance, economics, mathematics and computer sciences, which tend to skew towards men. For this reason, Jones says the Academy is also focused on hiring people from liberal arts backgrounds.

Liberal arts students aren’t typical hedge fund applicants, particularly when the hedge fund in question has seemingly been going all out to hire quants and specialists in machine learning. But Jones says it’s wrong to assume that a liberal arts degree is no preparation for an investing career. “We already have people with backgrounds in history or music. Our natural applicant pool skews towards finance, but Jami Goodfriend – who runs the Academy, has a particular preference for people from a history background. She believes they have a better ability to understand the overall story that accompanies the numbers on a spreadsheet.”

Needless to say, Point72 isn’t just keen to hire female historians. Male historians can apply too.

It seems fair to wonder why the fund wants more women and liberal artists to apply. It already has far more applicants than it can handle: there were 1,500 applications for around five places in Europe last year. It’s all about diversity, says Jones: “The best teams are comprised of a diverse set of members. We perceive that difference makes a difference.”

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Technology is creeping towards the bond trading desks of large investment banks. Government bond traders may have been the Masters of the Universe in the 1980s, but they’re going to have to accept that life is about to get tougher.

“The rise of electronic trading has reduced the number of traders working on a trading desk, so there are less people who have to do more,” said Vladimir Danishevsky, senior group manager and the head of corporate bonds flow electronic trading IT at Citi, formerly with Barclays and Credit Suisse. “Traders don’t have a choice – they need to apply this to their execution and their pricing on some trades which are not their primary interest or not for their primary customers to find a smart price that allows them to use most of their balance sheet for certain customers in the best possible way.

Banks are spending more. Greenwich Associates’ reported on fixed income trading released yesterday revealed that the nation’s top six government bond dealers are spending nearly $25bn on technology this year.

Bond traders are going to struggle to adapt, according to a panel of e-trading experts at the The Trading Show New York this week. The main drivers of change include regulations, higher capital requirements for banks, illiquidity, technological innovation and increasing institutional investor appetite for data-driven insights.

What does the rise of electronic trading mean for bond traders and their career prospects? Fewer traders on a particular desk saddled with more responsibilities.

“Most of the providers of liquidity are not interested in providing it to all sources, just their preferred customers – sell-side executions try to give preferential pricing to their golden customers, not the whole world,” said Danishevsky.

Firms are focusing on data analytics, transaction cost analysis (TCA) and best execution as they try to capitalize on newly available order-book and market data to enhance their operational efficiency and lower costs. But they still need humans working in those functions, even as technology begins to shoulder more of the load.

“Best execution is still between two individuals, one person talking to another person, and I don’t see how some of these [automation] practices trying to be put in place are going to improve the situation,” said Maxime Seguineau, a managing director and the head of algorithmic fixed income trading at Seaport Global Securities. “It’s hard in the credit markets especially to provide best execution not knowing what data is real and what data is not.”

“Electronic trading represents maybe 15-to-20% tops of the $700bn of bonds traded daily, so we’re not looking at a market structure that will mirror equities anytime soon, which is not to say that there won’t be opportunities, but you have to think about liquidity and the infrastructure required to get there.

Humans are still in charge of making requests for quotations (RFQs) or invitations for bids (IFBs).

“A workflow for corporate credit trading is primary RFQ-driven, which is legacy based on habits,” Seguineau said. “Even younger generations of traders follow that process, and firms are going to use an RFQ-based protocol regardless of trade size.

However, there are job opportunities in electronic trading technology infrastructure teams.

“The buy-side firms don’t even have enough expertise to build the systems,” Danishevsky said. “They’re mostly just using a Bloomberg Terminal and a MarketAxess Terminal, because they don’t have the expertise to get together and build something for all-to-all.”

The new electronic platforms enabling all-to-all trading are gradually starting to gain traction, but they are not a panacea for bond-market illiquidity.

“Banks are looking to all areas of technology to make things more efficient and moving forward, and it is becoming a bigger part of the marketplace, so if all-to-all provides some sort of liquidity to the market or another benefit, then it’ll be a success,” said Tom Bumbolow, a former executive director of credit sales at J.P. Morgan, where he worked for 19 years before leaving in March. “My concern is all-to-all only works if the clients are willing to put their balance sheets behind it, and I’m worried about the balance between buyers and sellers getting out of whack.”
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This summer I interned in the investment banking division of a European bank in London. It went well: I got an offer to come back and work here when I graduate, but the experience was marred by a serious problem I had with my boss.

I’m not writing this because I want to attack my boss or to get him into more trouble than he’s already in. I’m writing this because I’m angry and want to get it out there. Hollywood has – or had – Harvey Weinstein. Banks have men like my boss.

When I arrived for the internship, it was pretty clear that this man – an experienced banker who’s worked in the City for years – was having marital problems. I knew it, and so did all his colleagues. We couldn’t not know it: he was often on the phone in the office talking about his messy divorce. We could hear what he was saying and it was very awkward. There were arguments with his wife, conversations with family members; things that colleagues shouldn’t be witness to.

Maybe it was because of these marital problems that my boss started making unwanted advances on me. The first time, he called me “baby” and “darling” and asked me to go for a drink with him. I turned him down; I was polite about it and explained that I didn’t want to get involved with anyone at work.

Some men who’ve been told “no” think it’s ok to try again. My boss was one of those. The next time we were alone in the office, he came up behind me and put his hands on me, asking why I didn’t like to be touched. He also said – in somewhat fewer words – that he wanted to sleep with me.

Now, I was just an intern. I worked hard to get that internship and I really wanted an offer at the end of it. My boss would be instrumental in me getting that offer. He knew that and he was exercising his power.

Even so, I went to HR. I actually went to HR the first time, just to let them know that he’d made an advance. This made it easier to go again the second time, when he touched me. They were hugely supportive. I was preparing to make an official complaint of sexual harassment when he left. Overnight. I got in the next day and he’d cleared all his stuff. I haven’t seen him since. Maybe he got a whiff of what was coming.

In some ways, I was lucky. Lucky that I had the courage to go to HR and talk out against a man who seemed to have power over my future. Lucky too that he wasn’t aggressive. And lucky that I had the support of the bank and my other bosses (some of whom were very angry).

However, his actions made me wonder about the experience of other young women in banking. This is an industry with a lot of men in senior positions and a lot of young women lower down the hierarchy. Those men have an opportunity to abuse this power. The fact that my (ex-) boss was so bold made me question whether he’d behaved like this before and got away with it. He’d had plenty of opportunity to do so during his long career.

There are a lot of good men in finance. There are also some young women who use their gender to their advantage and send confusing signals. However, the gender imbalance in banking is so skewed that – like Hollywood – this is an industry with significant potential for the abuse of male power. Until there are more women at the top, it’s up to HR departments and good men – like my other bosses – to protect young women whose careers are only just beginning.

Laura Smith is the pseudonym of an intern at a bank in London.

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In CEO terms, Andrew Formica, the 46-year-old chief of $330bn active manager Janus Henderson, is something of a spring chicken. It was therefore a shock to be called a “dinosaur” in a public forum by one of his 21-year-old employees.

In fairness, the employee in question was referring to the digital approach of the company, rather than Formica himself, but it made an impression. “We probably were dinosaurs,” he says. “Millennials want to have a voice, and they’re not afraid to use it – even if that means calling your new employer a dinosaur in front of the CEO. It’s quite refreshing.”

Formica is on a mission to shake-up the way that financial services, and asset management in particular, is perceived by 20-somethings starting out. The recruitment process is too “blunt”, he says, and a focus on academics and internships inevitably mean that Oxbridge and other top graduates end up getting hired.

“In the past few years, most graduates we hired came from Oxbridge,” he says. “This year, not one came from those universities, two had biology degrees, one was from China and doesn’t speak much English and three of the six were women.”

Janus Henderson is not lacking applicants. Last year, 1,200 people applied for six roles on its graduate programme – suggesting a less than 1% chance of success. With such a stack of CVs on their desks, how do Janus Henderson’s recruiters ensure they don’t just cream off the applicants with the best academics and experience?

Formica says that they’re trying to focus on the “character” of the individual, rather than simply looking at achievements on their CVs, and Janus Henderson invites them to tell their “story” during the application process.

“We hired one guy who nursed his dying mother during her cancer treatment while studying and didn’t feel he could go back to university to finish his studies,” he says. “That level of integrity and emotional awareness would never come through over an application form. The old methods are too blunt.”

Formica has just signed up to CEO for a Day, an initiative set up by headhunters Odgers Berndston which attracted Standard Chartered boss Bill Winters last year. It allows one students to shadow a chief executive for 24-hours, and is an attempt to connect with Millennials and dispel some myths about the financial sector. Formica says he wants to learn what 20-somethings want from an employer, and what will stop them leaving for careers elsewhere, as well as “breaking down taboos about pre-conceived ideas about the industry”.

Sophie Peacock, a maths student at Durham University who has completed insight days at Barclays and J.P. Morgan and also worked at IBM, will be spending the day with Formica.

She says that financial services organisations have “very reputable graduate programmes” and the training they provide is appealing to students who want a solid base for their career – even if they move on to another vocation later. She’s currently still deciding whether to try and break into finance, or attempt to a secure a technology role after graduating.

This encapsulates two of the main issues facing financial services organisations trying to attract and retain top graduates. Firstly, many view it as a stepping-stone into another career, and then it’s also often a binary choice between finance and technology entry-level jobs.

For an industry trying to attract 20-somethings, it doesn’t help that many of the icons of asset management are over 70 – Janus Henderson’s Bill Gross is 73, Jack Bogle, CEO of passive investment giant Vanguard, is 88 and Warren Buffett is 87. 33-year-old Facebook founder Mark Zuckerberg and 46-year-old serial entrepreneur Elon Musk seem like more obvious inspirational figures.

But Formica says that preconceptions about finance being a boring refuge for fusty quantitative types seeking a big pay-day are as erroneous tech’s reputation as a sexy industry offering interesting, innovative jobs.

“You’re not going to get rich before you’re 25 working in the financial sector. We want to be seen as a place for a long-term sustainable career,” he says. “The average tenure for technology firms at the junior level is two years – they’re not getting this right.”

Formica says that he tends to shy away from making broad brush assumptions about what Millennials want from an employer. But, he says, financial services organisations need to be more vocal about offering opportunities for travel, solid career progression and should also be more open-minded about flexible working.

“Ultimately, Millennials want to be listened to. 20-odd years ago when I started out, it was a very hierarchical environment and when someone above you told you to do something, you’d say ‘yes, sir’,” he says. “Young people now have a greater sense of importance about getting their voice heard. They are much more vocal about sharing their views and challenging those in authority. We need to be open to that.”

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You might cringe when you hear clichés such as “You only get one chance to make a first impression,” but it’s still true – and it’s applicable to the Wall Street job interview process. Here’s how to ensure you start out right.

Get a good night’s sleep the night before

Especially if your interview is early in the morning, go to bed earlier than usual the night before if at all possible. Scientists say that insufficient sleep – six hours or fewer – can have serious consequences.

“No one appreciates a job candidate who yawns,” says Roy Cohen, career coach and author of The Wall Street Professional’s Survival Guide. “Also, don’t drink alcohol the night before, because depending on how much you drink, the smell may linger.”

Practice introducing yourself

You must have a concise, confident and impactful way to introduce yourself … and it should be so well rehearsed that it’s smooth as silk, according to Connie Thanasoulis-Cerrachio, co-founder of career coaching firm SixFigureStart.

It should include the number of years of experience you’ve had in the field; a quick mention of a huge accomplishment that saved the firm significant time, money or effort; and why you have passion for this position/company/industry and, most importantly, why you are a really good fit for this position.

“Show them how you can be the answer for their pain,” Thanasoulis-Cerrachio says.

Don’t overlook the obvious

Show up on time, but don’t get there too early.

“Nothing is more annoying than a candidate who arrives late,” Cohen says. “It suggests that you don’t take the interview seriously enough to be there when you’ve committed to be there and that you don’t value the interviewer’s time.”

Project the right body language

Your body language should be positive.

“Wear a great smile when you say hello, and use a solid handshake,” Thanasoulis-Cerrachio says. “Maintain a confident posture – hint … act confident even if you are not.

Cohen agrees that you should smile and use a firm handshake when introducing yourself to the interviewer.

“A candidate had a very weak handshake, so I encouraged him to practice and to imagine that he is someone who he admires who has a firm handshake,” Cohen says. “He gripped my hand firmly and I asked him, ‘So, who are you envisioning?’ He said, ‘My friend Catherine.’”

Dress to impress for a Wall Street job interview

A unanimous piece of advice: Make sure you’re wearing the right clothes, meaning an “impeccable” outfit that is appropriate for the interview.

“If you’re going to a startup, they won’t be wearing suits so you may look out of place, whereas at an investment bank you do need to wear a well-tailored suit,” Cohen says.

“Don’t have keys, change or anything else that jingles in your pockets,” he says. “Keep cool – moderation is the key to making a good first impression, anything in excess makes the interviewers uncomfortable. You should avoid strange or overly enthusiastic behavior, for example, if your arm gestures are wild, will be turn-offs.”

Take advantage of opportunities to mention your accomplishments

Go into the interview with an idea of a few strengths you want to convey regardless of the questions, says Janet Raiffa, career coach, the former head of campus recruiting at Goldman Sachs and the former associate director of the Career Management Center at Columbia Business School. Think about the answer to every question being some reason why they should hire you.

“Use the opening question – most likely some version of ‘tell me about yourself’ – to say as many positive things about yourself and to give examples,” Raiffa says. “This might be the only chance you have to sell yourself if the next questions are more analytical or pressure-based.

“Don’t worry about bragging or coming across as overconfident,” she says. “Confidence is one of the most desirable traits in an applicant.”

Listen

Make sure that you are listening throughout the Wall Street job interview and take a moment to respond if you need one.

“If you aren’t listening you may very well end up answering the wrong question, and slowing down your responses keeps you from sounding over-rehearsed,” Raiffa says.
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While most large investment banks are building their fixed income sales and trading divisions, Standard Chartered has emerged as a dark horse for senior hires in the second half of 2017.

It’s just brought in Jonathan Harding to lead its emerging markets institutional rates sales division in London. Harding, who has held various senior macro sales and trading roles across the City over the past 20 years, joined Standard Chartered from Nomura in October.

Harding spent the past four years at the Japanese bank as head of emerging markets macro sales, but left earlier this month for Standard Chartered. He joined Nomura in 2013 from Royal Bank of Scotland, where he was head of EMEA local markets sales. Before this, he was a managing director and head of emerging markets trading at Bank of America Merrill Lynch between 2005-2011.

Standard Chartered has also brought in Mei Ling Lim from Nomura. She was previously a managing director and head of sales for South East Asia at the Japanese bank. She’s now head of credit sales for Asia-Pacific at Standard Chartered in Singapore.

These are the the latest recruits in a rejuvenated markets business at Standard Chartered, which dumped 25% of its managing directors in 2015 shortly after new CEO Bill Winters arrived. Since hiring Roberto Hoornweg, a former partner at hedge fund Brevan Howard, as global head of financial markets in December 2016, Standard Chartered has been bringing in senior fixed income professionals. Hoornweg oversees capital markets, commodities, FX, rates and credit at Standard Chartered and has been instrumental in hiring some big names.

In September, it brought in Savady Yem, the former head of fixed income sales for Asia at Credit Suisse, as global head of private sales, based in Singapore. This follows the appointment of Jens Andersen and Molly Duffy as co-heads, financial markets in the Americas in July and named Matthew Hastings as global head of commodities in August, based out of London.

Despite generally poor results for most fixed income divisions in the third quarter, investment banks have continued to hire markets professionals.

Deutsche Bank said last week that it had hired 40 staff over the past 18 months across its credit sales and trading operations. Significant recruits include Paul Huchro, a former Goldman Sachs partner who joined as head of investment grade credit trading last week, as well as Cedric Lespiau, who came in as head of credit index and options trading from SocGen in May and Jeffrey Chang, who joined as co-head of high yield credit trading in New York.

Barclays hired Eric Childs, who was latterly a portfolio manager at Bluecrest Capital Management, as head of USD swaps trading earlier this month and also brought in Adam Glossop as a managing director on its rates trading team in New York in September. All these hires follow the appointment of Chris Leonard as head of U.S. rates trading in June. It’s also just named Guy Saidenberg, a former partner and head of sales strats and structuring at Goldman Sachs who retired in March last year, as global head of distribution. In all, Barclays has hired 21 managing directors globally this year, and two-thirds of them are in the markets business.

Goldman Sachs said in September that it was hiring for fixed income, as well as its strats and investment banking origination team in an attempt to turn its flagging trading operation around. Marty Chavez, Goldman’s chief financial officer, was peppered with questions from analysts about its hiring strategy in its Q3 earnings call yesterday, notably how it would be able to see through on its promises when so many European investment banks are bulking up. Chavez said that it had doubled the number of lateral hires in 2017 compared to last year, and that 80% of people who were given an offer accepted.

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It’s not easy to get a job at Goldman Sachs. In the bank’s annual shareholder letter, CEO Lloyd Blankfein regularly boasts about the hundreds of thousands of students who apply and the tiny minority who actually get accepted (the ratio was 130,000: 5,000 in 2016). But what if you don’t have to try your luck on Goldman’s graduate recruitment merry-go-round? What if you can start your career somewhere else and skip across to Goldman’s sunlit uplands midway through?

This is looking like a possibility,

During yesterday’s conference call, Goldman CFO Marty Chavez reiterated that Goldman has doubled its lateral hiring so far this year. Last month, Goldman CFO Harvey Schwartz said Goldman had doubled its external fixed income currencies and commodities (FICC) hires in 2017. It’s not clear whether Chavez was referring to the same division, but it’s clear is that if you want to work at Goldman Sachs you no longer need to get in at the bottom. You can now insert yourself half way up instead.

How far up? Executive director (the equivalent of director or senior vice president at other banks) looks like the sweet spot. In September and October 2017, Goldman has so far hired 16 executive directors globally according to LinkedIn. In the entirety of September and October 2016 the comparable figure for global ED hiring at GS was just five people. Executive directors typically have ten to 12 years’ experience.

And if you miss the ED entry opportunity? You can always try getting into Goldman as a managing director (MD) instead. As we pointed out earlier this week, the pace of senior hiring at Goldman has been causing apprehension among the firm’s MD hopefuls, who fear their chances of promotion have been blocked by all the big names parachuted in. These fears are not without reason: in September and October 2017 Goldman has so far hired-in seven managing directors. In September and October 2016 it hired in…two. Managing directors usually have fifteen years’ experience.

Needless to say, the fact that Goldman has hired 23 MDs and EDs in the past two months doesn’t imply that getting a job at the firm is now a cakewalk. Particularly compared to the thousands of people Goldman hires at the bottom. “We’re still very selective,” says one Goldman ED. “It’s a lean ship here.”

However, it does seem clear that Goldman Sachs is now in search of fresh, senior, blood. Schwartz said as much in September and Chavez confirmed this yesterday when he said that the firm is focused on bringing in “coverage and distribution” professionals, presumably as it seeks to increase its penetration of corporate clients. Even so, you don’t have to be a corporate salesperson to jump in at the top of Goldman’s hierarchy now: as the chart below shows, plenty of the recent hires have been in trading, technology, and support functions too. Most notably, Goldman recruited Robert Waugh, the former head of CloudWatch logs engineering at Amazon a few weeks ago.

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Don’t say we didn’t warn you. Right from the start – right from when Richard Rivero, the head of the 75-person team of Goldman Sachs engineers automating parts of the firm’s investment banking function, promised that in the rosy automated future junior bankers would be liberated from tedious tasks and free to travel about meeting clients to their hearts’ content, we said that it all sounded a bit fishy. Now, unnamed senior bankers have admitted that indeed it is.

Those senior bankers aren’t necessarily at Goldman, but then Goldman isn’t the only bank busy trying to apply artificial intelligence wherever it can. They could just as easily be at J.P. Morgan or Bank of America. What matters is that something bad is coming, and they all know it.

Young people entering banking now need to, “pick their careers very carefully,” one, “top executive at a major Wall Street bank,” tells Bloomberg. He has children who are contemplating their careers and he says most areas of banking are a risky choice: “I think AI is going to eliminate most jobs. That’s a private view. I think we’re just starting to feel that.”

He’s not alone. Bloomberg spoke to about a dozen executives and technology consultants working on AI roll-outs with those executives and their message was the same: sentient machines will take over much more than has been discussed and banks won’t need nearly as many people.

It’s not their generation of staff who will suffer. As machine learning software designs its own trading algorithms, reads through company reports for relevant data, works out which clients to contact, scans legal documents, or runs deal processes, superannuated senior human beings will simply be phased out as they become obsolescent. “As we have attrition – internal or external – I’m just not replacing those people,” says Tom DeCarlo, an MD on UBS’s innovation committee.

Instead, it’s the young people at the start of their careers who want to get into banking but won’t be able to, or who land an analyst job only to find it automated away who will suffer. Last month, UBS CEO Sergio Ermotti said 30% of banking jobs could go in a decade due to AI. Bloomberg speaks to another UBS executive who puts it at 40% in four to eight years.

Meanwhile, none of the senior bankers Bloomberg spoke to believed their own assuaging words about AI creating a future filled with interesting work and client contact. The future, instead, is one in which most junior banking jobs won’t exist. As we pointed out previously, clients have no need of roving bands of 22 year-old analysts desperate to sell them the next M&A idea.

Separately, Romaine Taihuttu probably deserves some kind of prize for being the most tolerant spouse of a trader. Her husband, Didi, has got a thing for Bitcoin (he thinks it’s going to rise) and has persuaded her to liquidate everything in order to make the most of it. The family have sold their house, their cars, their shoes and put all their money into the cryptocurrency. Until the appreciation happens they are living on a campsite in Holland. “I was like, ‘What the hell is bitcoin and crypto coin?’ It was a lot for me to handle,” says Taihuttu. “But then I got into it, and it made me believe it was a good change in our lives — for my children, for my husband, and for myself.” Right.

Meanwhile:

This is the way in which AI will steal your job, division by division. (Bloomberg)

Bank of America is incorporating artificial intelligence into spreadsheets. (Payments)

Julian Pomfret-Pudelsky, a fixed-income algorithmic trader at Credit Suisse has invented a system called CSLiveEx, which will allow Credit Suisse to trade with more clients without employing more traders or balance sheet. (WSJ)

Goldman Sachs has asked some clients to pay $30k a year for up to 10 of their staff to access basic research through its analyst portal. They’ll have to pay more to actually meet with analysts. (Bloomberg)

Selling personal loans and mortgages, which could be Marcus’s next target, is not a job designed for masters of the universe. Regulation and economics are rendering Goldman Sachs ordinary. (Financial Times)

Amsterdam, Madrid or Frankfurt? UBS bankers have been asked to choose. (Reuters)

UBS will be paying its US wirehouse advisors in exactly the same way as last year. (Barrons)

Jailed LIBOR trader Tom Hayes has raised £91k in crowdfunding and can appeal to get his $2.5m house back. (Bloomberg)

Start the day with an hour long bath to “think about things.” (Telegraph)

Bull in Brooklyn. (NYTimes)

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It makes no sense. You’re technically excellent, continue to bring in the numbers and yet your career is at a standstill. Management roles, or even a necessary bump up to get a bigger salary, continue to be elusive.

The fact is that career progression in banking, although very linear, can be difficult to manipulate. Your actions, however seemingly inconsequential, could be inadvertently sabotaging your career. What’s more, your own perceptions of your abilities could be out of line with how you’re seen by those making the decisions on promotions. Projecting the right image, walking the right line and talking the right talk are – like it or not – essential to making it into a leadership role. These are the mistakes to avoid.

1. You are pushing too hard, too early

Any junior investment banker spouting the advantages of working in investment banking will make reference to the ‘steep learning curve’. The fact is that the long hours and the rapid ingestion of technical knowledge can convince you that you deserve more than your rank suggests. Couple this with the competitive working environment encouraged by investment banks, and an individualistic attitude can too easily prevail.

“People fail to understand that all systems are political systems and the ability to play the game effectively is vital,” says Graham Ward, the former head of equities at Goldman Sachs and now adjunct professor of leadership at INSEAD. “Not being a collaborator and treating one’s career as if it were a solo enterprise does not work.”

2. You have backed the wrong horse

Investment banks can be political places to work. Mentors are important, and so are advocates throughout the organisation, but you cannot pin your hopes on a few key people. Management teams in investment banks get reshuffled all the time, and very often it’s the key lieutenant of senior people who follow quickly out of the door. Think Colin Fan, co-head of Deutsche Bank’s investment bank who departed shortly after co-CEO Anshu Jain departed in 2015. Or the fallout from Barclays after CEO Bob Diamond resigned in 2012. The key is to have a network within the bank, not to pin your hopes on a single individual or fiefdom.

“The predominant reason for failure in investment banking is not having the right relationships across a broad enough network of people within the organization,” says Chris Roebuck, the former head of HR at UBS investment bank and now visiting professor of leadership at Cass Business School.

3. You are learning the wrong lessons

Banks are notoriously bad at fostering leadership capabilities. Very often, it’s the top performers who are promoted to leadership roles, based more on their revenue-generating abilities than their capacity for leading teams of people. Once they reach a certain level, these problem derails their career progression.

“Leadership requires vision, ability to create strategy and implement it, and have ordinary people doing extraordinary things,” says Ward. “There is no secret sauce for this. Investment banks typically do not invest heavily in their people. So leaders need to learn on-the-job. That can prove fatal.”

4. You take, but never give

Investment banks may have traditionally promoted people based on their ability to produce revenues, but if you think that you’re able to make it into a senior role simply by looking out for number one, and using others for your own means, you’re unlikely to go very far, says Roebuck.

“Investment banks have historically fostered a culture which favours the individual. If you do one over another person, you can benefit, get a bigger bonus and progress,” says Roebuck. “The problem with that is that once you’ve done it once or twice, people get wise. You get a reputation for being a taker. You need to give as well or you will never truly move up.”

5. You are simply lacking the right personality

As intangible as it seems one of the biggest areas where people fall down inadvertently is simply by having the wrong personality traits. Skills can be developed, traits are seen to be hard-wired.

Can you fake it? Maybe not. A study by headhunters Korn Ferry suggests that being considered “volatile” or “closed” are among the worst because this makes you unsympathetic to others’ views and resistant to change. These two may seem obvious, but there are more.

“Traits such as trust or optimism seem positive on the surface, but too much of these traits may make leaders excessively hands-off,” said Steve Newhall, managing partner of Korn Ferry Leadership and Talent Consultancy, UK.

6. You are lacking the necessary openness

To manage people in investment banking is to straddle a huge range of cultures. To be able to thrive, you must be able to accommodate and empathise with a broad demographic. This requires “level-headedness, discipline, street smarts, intellect and the capacity to build teams”, says Ward.

“Investment banking is now global business and the ability to connect with people from different cultures is vitally important,” he says. “Moreover, Generation Z have a different set of desires and values in terms of the working environment. A sensitivity to that is also vital.”

“I recommend leveraging your lunchtime,” says Roebuck. “So many bankers are in mini-fiefdoms, but speaking to people in other departments allows you to develop relationships and find out what issues they have and how you might be able to help them.”

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As U.S. investment banks prepare for a hard or “bad-tempered” Brexit, they’re putting their money where their mouths are and taking out leases on new offices in European cities. Accordingly, Goldman Sachs has leased the eight top floors of Frankfurt’s new Marienturm skyscraper, for occupation once it’s completed in 2019. And Bank of America has leased 9,300 metres squared at an old postal and telegraph headquarters in Paris’s eighth arrondissement.

Therein, the two banks are both expected to house front office staff including salespeople and traders. Goldman Sachs will have up to 800 people at the Marienturm. Bank of America will have up to 1,000 at “La Poste.”

Photographs of the two new offices are available online. We would suggest that Bank of America’s Parisian option looks far more stylish. This may be the fault of the British: they bombed Frankfurt’s ancient medieval city into nothing during the Second World War. While BofA’s new Paris office is therefore a refurbished building from the late 1800s, Goldman’s new Frankfurt office building looks more reminiscent of 2007 Dubai.

1. Goldman Sachs’ new Frankfurt office is very “golden”

The photograph below is off the entrance hall at the Marienturm. It has a whiff of Harrods circa 1989, or Riyadh sometime last week.

Goldman Sachs office Frankfurt

2. Bank of America’s new Paris office is very “clean”

OK, Bank of America’s new Paris office has some gold, but there’s none of the dangling golden draperies of the new GS office in Frankfurt and it’s all pretty clean. In the mock-up below, the new BAML atrium looks more like a high end clinical facility than an Arabian palace.

Bank of America office crisp

3. Goldman Sachs’ new Frankfurt office is in a big shiny tower

You’ll like Goldman’s new EU headquarters if you like shiny and tall. You won’t if you want something a little more “culturally resonant.”

Goldman Sachs Frankfurt office

4. Bank of America’s new Paris office is in an art deco building dating back to the late 1800s

Bank of America’s new building started out as a telegraph, telephone and postal exchange over 120 years ago. It’s all very Haussmann but has been renovated in shiny white inside (see above).

Bank of America Paris office

5. The communal spaces at Goldman’s Frankfurt office look like one of Saddam Hussein’s palaces

The golden draperies are everywhere in the Marienturm. Also: ferns.

Goldman communal spaces

6. And the (envisaged) offices at Goldman in Frankfurt look like something from British Home Stores (BHS) in 1984

Companies in the Marienturm are free to adapt their offices spaces as they wish. The office below is therefore just a proposal and may not be taken up by Goldman Sachs. Still, it’s always a possibility. Whilst this look is very contemporary and the wood is undoubtedly solid, it’s also a throwback to the heady days of Thatcherism and veneered furniture.

Goldman Sachs Frankfurt office

7. Bank of America’s Paris office has a bushy atrium

There are trees outside the Marienturm, but La Poste has a garden area inside too. Neither building compares to Apple’s new circular campus filled with trees but BofA’s does seem the “closer to nature” of the two.

Bank of america Paris office Brexit

8. Roof gardens filled with lavender, shrubbery and sofas….

In total, La Poste has 800 square metres of terraces and gardens, some of which are on the roof and (according to the mock-up below) are planted with lavender.

Bank of America Paris office Brexit

9. And offices split into mezzanine levels with a lot of natural light

And while the office mock-ups at the Marienturm look like a 1980s furniture showroom (see six), the offices at La Poste are more reminiscent of the standard corporate workplace. The only problem is that this is a little boring.

Bank of america Paris Brexit

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A former Brevan Howard portfolio manager, who left in June last year, has re-emerged at credit-focused hedge fund that’s quietly been hiring from investment banks.

Shawn Cooper, who spent at year at Brevan Howard after joining from Deutsche Bank in May 2015, is now a portfolio manager at Orchard Global Asset Management. Cooper was previously head of European asset-backed securities and collateralized debt obligation (CDO) trading at Deutsche Bank, where he spent more than nine years.

Orchard is an alternative asset manager that focuses on structured credit, direct lending and opportunistic fixed income investments. Cooper is the latest senior former investment bank trader to join the hedge fund this year.

Viktor Sebek, a credit trader who spent nearly 12 years at UBS, joined in a similar role at Orchard in January. Philip Sbrocchi, who previously worked at Moelis & Co and hedge fund sponsor Merced Capital, and Tom Jørgesen, a director within Deutsche Bank’s structured sales team who left in July last year, joined as a portfolio advisor. Both arrived in April.

Cooper left Brevan Howard in the middle of last year, shortly after the hedge fund reportedly lost $1.4bn in redemptions and senior employees started to depart. Headcount has continued to shrink so far this year, and Brevan now has 68 employees registered with the Financial Conduct Authority in the UK, down from 74 at the beginning of the year. Recent departures include Karsten Filt, a portfolio manager, who joined hot hedge fund start-up Amia Capital earlier this month, and Rajesh Amin, a former Goldman Sachs trader who was Brevan’s head of investments, left in September.

There’s still been the occasional senior hire at Brevan Howard this year, however. Andrea Casulli, co-head of European government-bond-trading at Goldman Sachs, joined in a senior trading role in September. Kanishk Sarin, a former senior rates trader at Deutsche Bank, joined from Capstone Investment Advisors in July, while Duncan Larraz, who was latterly head of quant analytics at asset management firm Tages Capital, joined as a strategist in June.

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Louis Nees has pretty much seen it all during his time working on Wall Street, having jumped from one legendary-yet-doomed investment bank to another before reinventing himself and ultimately ending up at a fintech startup.

After graduating in 1983 from Cornell, where he was a varsity football player, Nees got his start on Wall Street at Lehman Brothers, where he would work his way all the way up to managing director over the course of 14 years. He traded all sorts of mortgage products, including derivatives such as MBS, agency CMO, IO and PO, options and prepayment-linked swaps, caps and floors.

In 1997, Nees moved over to Bear Stearns, where he utilized derivatives within structured products or structured investment vehicles and, in 2004, helped to launch and ran the mortgage credit derivatives trading desk. That’s what he was doing when everything started to crumble around him as the financial crisis hit.

“We were having discussions internally, asking each other, ‘Is the whole system going to collapse?’ because that’s what it looked like, and if it does, what was the world going to look like?” Nees says. “It didn’t end up happening, but we came close.

“[During the depths of the financial crisis,] I wasn’t thinking about what my next move is going to be – it was more constantly putting out putting out fires, trying to figure out how are we going to be protected,” he says.

Nees worked at Bear Stearns through 2008 after it was acquired by J.P. Morgan, staying on to lead the integration of the two banks’ mortgage credit derivatives trading desks. He did not stay for long.

“I was only there for six months because the big-bank culture and I did not get along very well,” Nees says. “I didn’t like the bureaucracy – I went from a place at Bear Stearns if you were working on a large significant transaction you could meet with people and get an answer in a couple of days.

“While part of it was the timeframe, with the financial crisis exploding around us, a process that would take days at Bear Stearns would take months at J.P. Morgan, because we had to go through various committees to get sign-offs,” he says. “I wanted a more entrepreneurial environment or a flatter organizational structure.”

In 2009, Nees joined the global capital markets division of GMAC, previously a GM subsidiary that rebranded itself as Ally Financial, where he worked for four years. His next stop was Walter Investment Management Corp., where he ran capital markets for the mortgage company and eventually moved over to run its private real estate investment trust (REIT) up until 2016, when the biggest investor backed out, the REIT closed down and he started his own consulting business.

Earlier this week, Nees took on the role as the head of capital markets at PeerStreet, an Andreessen Horowitz-backed startup with a platform for investing in real estate-backed loans. Why did he decide to make that move?

“Legacy financial institutions are burdened with old systems that make them prone to being left behind by startups coming up with a bigger technological advantage,” Nees says. “I looked at the fintech space and realized that there are a ton of really smart people who are forming these startups, including in the specialty finance space, but a lot of them lacked deep capital markets expertise.

“I thought this could be a really good fit – my background and experience put together with someone who had a great business plan at the right time, and I felt that PeerStreet’s was the most compelling,” he says. “Over the course of my career I’ve had to fix things, downsize or ‘rightsize’ teams, but at this point in my career building something out is much more interesting to me.”

How to decide between Wall Street and fintech

The industry has changed since Nees got his start – tenures of 10-plus years at a single bank aren’t as common as they used to be. That said, he still thinks the traditional investment banking career path is viable. However, it’s not for everyone, and a fintech startup offers its own unique set of challenges and potential rewards.

“Getting experience at an accounting firm or a big investment bank for a couple of years – that’s great, because it gives you really good grounding – how does this big machine in the finance world work?” Nees says. “In general, that’s a great way to start, but that doesn’t work for everybody.

“Sometimes one of the most interesting things for young people is to join a startup, where you can gain insight on operations and a wide range of things from the very beginning and see how a business survives day-to-day,” he says.
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If you work for Blackstone this year, you’re going to get paid a lot. Not just a small lot like Goldman Sachs, but a big lot – a huge lot – a lot that’s a lot more than last year.

Blackstone just reported its third quarter results. Thanks to big gains in its real estate portfolio and asset sales they were very good. Blackstone people are being paid accordingly.

Blackstone doesn’t disclose how many people it employs in its quarterly results. Elsewhere on its site it says it employs around 2,300 people, however. Last year, it employed around 2,200. In the first three quarter of 2017, Blackstone has accrued nearly $2bn in compensation spending. In the first three quarters of last year, it accrued nearly $1.4bn.

Here’s how that plays out on a pay per head basis.

And here’s how that pay is structured (also on a per head basis).

So, basically Blackstone has massively increased the amount of realized and unrealized incentive fees and carried interest it’s paying. Incentive fees are bonuses and realized incentive fees are cash bonuses. “Unrealized incentive fees” are effectively deferred bonuses. Carried interest is what private equity professionals get paid when investments they’ve made are sold at a profit (often years later) and exceed a hurdle rate. Unrealized carried interest represents that carried interest that will be paid when existing investments which have already exceeded their hurdle rates are exited.

Even though not all of that $860k average Blackstone pay package (for the first nine months only of this year) is realized, working for Stephen Schwarzman therefore looks very lucrative. By comparison, average accrued pay at Goldman Sachs so far this year is $271k – nearly 70% less.

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For years, Goldman Sachs recruited top coders to help its traders execute strategies with software, a role that’s becoming ever more important, but the technology gurus seen as the future kept quitting while traditional traders stayed. To solve the problem, the bank began registering coders as full traders and handing them control of their desks, shaping who will run the trading division for decades to come.

Few if any jobs in finance will be untouched as firms build computer systems capable of handling everything from routine tasks to trading and investing, according to Bloomberg.

Adam Korn, a managing director and the global co-head of the equities franchise trading and securities services strats groups at Goldman, shows how to survive. Korn wasn’t always a technologist. He started his career in IBD: Korn left college and became an investment banking analyst at Credit Suisse First Boston. He quit that after two and a half years to co-found a web software startup during the first tech boom. That went bust after the dot-com bubble burst in 2001.

However, it was this foray into tech start-ups that seemingly gave Korn the opportunity to pivot his banking career away from M&A and into banking technology. When his start-up failed, Korn re-joined banking in 2002, arriving as an associate in the equity derivatives research group, focusing on market microstructure research at Goldman. From there, he rose to partner. Now Korn leads a group overseeing digital strategy for the bank’s securities division. If you want to escape traditional banking and reinvent yourself as a tech guru, Korn’s example looks like a good place to start.

In his new rule, Korn has pioneered a program that offers trading certifications to Goldman’s strats, increasing their potential to earn more money or advance. Some within the bank dub the new breed “traders who code” or “coders who trade.” Either way, fewer strats are quitting, and more are scoring promotions, leading to higher retention.

Separately, the opioid epidemic that has plagued poor and working-class communities across the country is hitting Wall Street’s rich and powerful, who often get hooked on prescription pills after injuries.

Former Lazard Capital Markets and Jaffray Cos. trader Trey Laird’s own addiction to OxyContin was an inspiration for a business opportunity. He has been clean for six years and last year opened a luxury sober-living home in a mansion in Darien, Connecticut, one of the richest towns in the U.S., according to Bloomberg.

Laird’s company, the Lighthouse, opened a second branch this year in nearby New Canaan. Its brochures, featuring seaside vistas, advertise chef-prepared meals, trainers, professional housekeeping and “all the comforts of home” for male professionals. A bedroom there costs $12,500 a month with a roommate or $15,500 without one.

Drug overdoses killed 1,374 people in New York City last year, or 20 in 100,000 residents, a rate that climbed for a sixth straight year and has more than doubled since 2010. About 80% of those deaths involved an opioid.

While opioid overdoses increased 16% nationally from 2014 to 2015, they jumped about 25% in New York and about 31% in Connecticut, both among the wealthier states.

Meanwhile:

Brett Redfearn, J.P. Morgan’s global head of market structure for its investment bank, is set to become the new director of the SEC’s division of trading and markets. (MarketWatch)

Lloyd Blankfein trolled the U.K. on Twitter. (Bloomberg)

Just left Frankfurt. Great meetings, great weather, really enjoyed it. Good, because I’ll be spending a lot more time there. #Brexit

— Lloyd Blankfein (@lloydblankfein) October 19, 2017

David Rosenberg had the worst Wall Street new-hire onboarding you could ask for when he started out as a junior economist at the Bank of Nova Scotia on Black Monday, October 19, 1987, when the Dow plunged by a record 22%. (Business Insider)

The crash 30 years ago was so severe that it resulted in a spike in hospital admissions. (Quartz)

There’s been a lot less trading in recent months as ultralow volatility, a lack of market-moving news and the rising popularity of passive investment funds. (WSJ)

Blackstone’s AUM hit a new record. (FT)

State Street’s active equities CIO says that in the asset management industry there’s “less need for those benchmark-hugging skill sets, but then more so on the high active and, quite frankly, on the quant investing and smart beta investing sides.” (Business Insider)

Holy fee compression, Batman! Lee Ainslie’s $10bn hedge fund Maverick Capital is offering 0% performance fees to some investors. (WSJ)

Being manipulative and mean isn’t the secret to success, as psychopathic hedge fund managers actually make less money than their saner, nicer peers. (Bloomberg)

Tezos, the startup which raised $232m via an initial coin offering (ICO) in July, is already imploding. (Bloomberg)

Jamie Dimon bashed Bitcoin, and now cryptocurrency mavens are bashing him. (Business Insider)

Chinese fintech is red-hot. (Business Insider)

Follow @danbutchrwrites

““

Joining a start-up hedge fund is risky. Many fail, others take years to turn a profit, while some star fund managers – Chris Rokos, Edward Eisler or Edouard de Lanlade – have been hitting it out of the park in the first couple of years of operation.

Another hotly anticipated hedge fund launch in 2015 was Greenvale Capital, the $150m fund set up by Bruce Emery, a former Citadel portfolio manager who also ran his own hedge fund Naya Fund for two years.

Things don’t seem to be going so well. In recently published accounts for 2016, Greenvale revealed that it had made £52.8k profits on the back of nearly £1.4m in revenues. This is up from £17.1k in 2015. Separate figures for its LLP, which covers revenues for its senior partners, suggest a £404k loss in 2016, which is up from £778.1k in the red for the prior year. This was shared among six members

Greenvale also said that it had six employees, which it paid £586.4k – or £97.7k on average.

The hedge fund has kept headcount relatively flat since its launch and remains a small operation. Nonetheless, it’s managed to attract some names from bigger institutions.

Patrick Marx, an analyst and partner, joined from Millennium Management, and Christopher Dennis, another partner in business development, came from Deutsche Bank’s prime brokerage division.

Further down the tree, its employees include Olly Cobb, an analyst who has previously worked at Bank of America Merrill Lynch and Kynikos Associates, research analyst Fia di Liscia, who came from AlphaSights, and Hannes Noeckler, who came from Oaktree Capital Management.

Hedge funds remain attractive to investment banks’ traders, who continue to gravitate to the buy-side even if it’s for a small start-up. However, 2016 was a rough year – more than 1,000 funds shuttered, according to figures from Hedge Fund Research, which is the highest number since the 2008 financial crisis. In the first half of 2017, 481 funds shut down, while 369 have been launched.

Follow @paultclarke

Contact for news, tips and comments: pclarke@efinancialcareers.com

Image: Getty Images

““

1. As machines take over trading floors, human traders are being supplemented by various types of technology

2. Complex algorithms now provide clients with pricing information

3. “Internalization engines” are now used to help banks hedge trades

4. Sometimes internalization engines don’t work though

5. In future, more hedging will take place through derivatives markets

6. You don’t need to work in a trading technology team at a bank to work in trading tech

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1. Apply as a “client service” professional

2. Apply in Asia

3. Apply in “risk advisory” or consulting – not audit

4. Join either as a graduate or as an “experienced professional”

5. Specialize in the financial services industry

6.Don’t be privately educated

7. Moderate your pay expectations

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Get a good night’s sleep the night before

Practice introducing yourself

Don’t overlook the obvious

Project the right body language

Dress to impress for a Wall Street job interview

Take advantage of opportunities to mention your accomplishments

Listen

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1. You are pushing too hard, too early

2. You have backed the wrong horse

3. You are learning the wrong lessons

4. You take, but never give

5. You are simply lacking the right personality

6. You are lacking the necessary openness

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1. Goldman Sachs’ new Frankfurt office is very “golden”

2. Bank of America’s new Paris office is very “clean”

3. Goldman Sachs’ new Frankfurt office is in a big shiny tower

4. Bank of America’s new Paris office is in an art deco building dating back to the late 1800s

5. The communal spaces at Goldman’s Frankfurt office look like one of Saddam Hussein’s palaces

6. And the (envisaged) offices at Goldman in Frankfurt look like something from British Home Stores (BHS) in 1984

7. Bank of America’s Paris office has a bushy atrium

8. Roof gardens filled with lavender, shrubbery and sofas….

9. And offices split into mezzanine levels with a lot of natural light

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