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Arafat Sheik Jabbar, Director and Asia Pacific Channel Services Head, at Citi, credits his Hong Kong University MBA for enabling him to land his dream job.

Sheik Jabbar started his career as a Software Engineer in Infosys, working on Technology delivery programmes for Transaction Banking for the likes of ABN AMRO and Royal Bank of Scotland in Europe and India. His experience made him keen to change his career and move into banking.

He says: “After spending five years in technology development, and interfacing more with business managers on the bank side, I felt something was lacking and I wanted to get a better sense of how business is managed.

“I found all the business managers were able to appreciate things holistically, not just the technology, but also financial strategy and marketing, and that is when I decided to do an MBA.” Sheik Jabbar soon identified HKU’s MBA as the programme that was best suited to helping him achieve his career goals.

Not only does it have a strong academic reputation, ranked as the number one MBA in Asia by the Economist magazine for eight consecutive years, but its strong Asia-focus and geographical location in a major banking hub with an expanding financial services sector also appealed to him. “The programme had the perfect balance between East and West, offering exposure to both Asia and global economies,” he says.

Sheik Jabbar’s investment in his career paid off, and immediately after graduating, he landed a job at Standard Chartered as Associate Director and Regional Channel Manager, Transaction Banking, where he was in charge of five key markets in Greater China and North Asia, focusing on Electronic Banking Channels for both global and local corporates.

But he did not stay there long, as a little over a year later, he was approached by Citi about becoming Regional head of Online Banking Product Management for corporates in Asia Pacific in Citi’s Treasury and Trade Solutions (TTS) business.

TTS provides an integrated suite of innovative and tailored cash management and trade finance services to multinational corporations, financial institutions and public sector organizations across the globe.

He has since been promoted to his current post of Asia Pacific Channel Services Head.“The role is basically product management leadership, overseeing conceptualisation, development and execution of the digital banking product road map across Corporate Internet Banking Portals, Mobile Apps, APIs, ERP connectivity, with a long-term view,” he says.

“I am very happy I could get into this role because it is what I specifically wanted to do.” Looking back on his MBA, Sheik Jabbar says the programme was extremely well thought out. “Everything that was non-technology was very interesting for me because I wanted to make a move into a new industry,” he says.

He adds that the courses that focused on multinational organisations were a “real eye-opener” for him in terms of how these companies competed and defined their fundamentals. Having previously worked in Europe and India, he also found the cultural aspects of the programme helpful.

Jabbar says: “The Asia-focus was a key aspect of the programme for me. Asia is a very heterogeneous dynamic landscape.” The programme kicked off with a one-month immersion course in Beijing. “It was a really good start to the programme to appreciate what a unique market China is and how businesses there are run,” he says.

He adds that having the chance to meet people running both local businesses and multinational corporations in China helped him understand the mindset of the business community there and proved to be a good building block for when he came to Hong Kong.

Another key benefit of the HKU MBA that Sheik Jabbar appreciated was the small class sizes, with typically only around 50 to 55 students in a group. “The small classes led to a very high level of bonding. In a large group you don’t get to maximise on the connections you have, but in a small one the networking is really good,” he says.

The diversity of the background of the other students, coupled with HKU’s innovative use of case studies for teaching, also helped to deepen Sheik Jabbar’s understanding of many topics.

“The diversity helped me to understand different answers and solutions. People came from different backgrounds, such as accounting and marketing, and for some of the content I would learn better one-on-one with my classmates, who were experts in the subject matter,” he explains.

As a fulltime MBA student, Sheik Jabbar also spent four months as part of the London Business School track, which he says really complimented what he had learned about Asia.

One of the things that stands out most for Sheik Jabbar about the HKU MBA was the Business School’s impressive network and the contacts it has with companies, particularly in the financial services sector. Sheik Jabbar was able to really tap into this network when it came to finding a job.

“I met the heads of all the major banks in Hong Kong. I was able to go to them and have a discussion and tell them about my background and my skill set,” he says. Jabbar has no doubts about the benefits of his HKU MBA. “I was able to get the Product management career path I wanted. It really is my dream job,” he says.

It’s A Level results day in the UK. The exams, taken by students before they start university and seen as a proxy for 18 year-old promise, have served up another round of exceptional attainment: 26.4% of students achieved A or A* grades, even though the exams were intended to be more difficult than last year.

Goldman Sachs should be delighted. Although the U.S. bank doesn’t stipulate that its graduate recruits (analysts) achieve particular grades at A level or even a particular class of degree at university, the U.S. bank has a tendency to hire students with exceptional grades. All those new A grade students are potential future GS employees.

A brief perusal of LinkedIn profiles of the analysts hired by Goldman Sachs this year and last reveals that Wajih Ahmed, the 20 year-old Goldman Sachs associate who achieved three A*s and one A in his A levels between the ages of ten and fourteen, is exceptional at Goldman for having passed the exams so young – but not exceptional in having exemplary A level grades. Almost all the young people hired by the firm are straight A students.

Hence we have people like Shun Kobayashi, hired onto Goldman’s fixed income currencies and commodities programme last year with three A*s and two As at A level (after studying at Eton College), or Nikul Shah, with 4 A*s (seemingly in Goldman’s corporate treasury division), or Emelia Martin in technology with three As and a B.

In a random sample of 12 Goldman analyst hires in the past two years, the A Level results are fairly uniform: Goldman likes straight A students. And it likes them even if they’re not going into the front office.

Goldman didn’t respond to a request to comment for this article. Its thing for academic high achievers is undoubtedly one side effect of the 130,000+ people each year who apply for around 5,000 internships. How else can they be narrowed down but through academic grades?

So, what happens if you achieved three Cs (or worse) in your A level results today? Does this mean you should give up on your GS dream? Maybe. However, it’s worth bearing in mind that an element of selection bias may be at play in LinkedIn profiles: Goldman analysts may only state their A level results on the site if they were exceptional – plenty don’t give their results, so how did they fare?

Equally, there are role models at Goldman who didn’t shoot the lights out aged 18, but who differentiated themselves later on. Most notable among them is Joanne Hannaford, head of EMEA technology at the firm. Hannaford didn’t take A levels but opted for a more vocational BTEC qualification (where she achieved 14 distinctions and three merits), before gaining a first class degree in computing from Staffordshire University and a PhD in computer from University College London. Now she’s a Goldman partner.

Alternatively, you can always differentiate yourself in other ways. Nicola Groves, a member of the 2017 analyst class at Goldman in London achieved a ‘mere’ two As and a B in her A levels (and went on to get a first class degree), but she’s also a professional sailor who was part of the British team in the Rio 2016 Olympics.

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UBS has hired a former Goldman Sachs managing director to head up the data lab within its investment bank. Ronald Jansen started at UBS in New York in August.

Jansen spent the last 13 years at Goldman Sachs leading a global team of strats within its investment bank, focusing on M&A, capital markets and derivatives structuring, according to LinkedIn. Goldman named him managing director in 2010.

Jansen’s pre-investment banking background is rather atypical, though maybe not for someone who runs a team of strats. He has a bachelor’s and master’s degree in engineering as well as a PhD from Yale in bioinformatics – a field that relies on computer science and mathematics to interpret biological data.

After graduating, he spent two years at Memorial Sloan-Kettering Cancer Center studying signal processing in cells using computational simulations. That’s when Goldman Sachs tapped him to join their investment bank, proving you don’t need a finance degree to be successful there. Being a data scientist with two post-graduate degrees likely helps, however.

UBS has recently made a large investment in alternative research within its investment bank – or corporate client solutions group. Its engineers and analysts took apart an electric car last year, piece-by-piece, just to understand how much it was actually worth, according to a recent Business Insider expose.

Follow @BeecherTuttle

Have a confidential story, tip, or comment you’d like to share? Contact: btuttle@efinancialcareers.com
Bear with us if you leave a comment at the bottom of this article: all our comments are moderated by actual human beings. Sometimes these humans might be asleep, or away from their desks, so it may take a while for your comment to appear. Eventually it will – unless it’s offensive or libelous (in which case it won’t).

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Deutsche Bank insiders say the German bank has been hit by a wave of senior resignations in the U.S. Meanwhile, Deutsche Bank technology staff are complaining about the tone from the top.

The U.S. exits are understood to include Dan Persad, head of infrastructure change for the Americas, Martin Arzac, an MD in leveraged finance, Katie Jannelli, another managing director, Jon Richman, Deutsche’s former head of trade and financial supply chain in the Americas (who’s gone to Santander) and Joerg Obermueller, a vice president.

Deutsche is also understood to have lost another investment banker in London: insiders say that Vikram Gandhi, a director in the capital solutions group has resigned. This follows the earlier resignation of Kristian Triggle, a “solid member” of Deutsche’s London FIG team.

The exits come as Deutsche Bank is in the process of extracting 7,000 jobs from across the organisation. Earlier this year, London headhunters said Deutsche was offering buy-backs of as much as 50% to persuade its most special staff to stay, but insiders say the emphasis at the bank is now on cost-cutting by whatever means possible.

Deutsche’s front office job cuts theoretically ended in July, but middle office staff in risk and technology are expected to bear the brunt of the next round of layoffs.

This might explain why Deutsche’s technology staff are displaying some signs of unhappiness. When DB reported its second quarter results, it revealed a slight decline in technology spending even as rival banks were increasing their investment in tech (CEO Christian Sewing said the bank is focusing its efforts on regulatory remediation and innovation). The declining spend followed former Deutsche COO Kim Hammonds’ suggestion that Deutsche was the most “dysfunctional place” she’d ever worked and accompanied the bank’s failure to cut its operating systems from 45 to four as planned (although it is now down to 27 from 32 in the first quarter of this year).

“We’re being given endless pep talks by Peter Wharton Hood [chief operating officer of the corporate and investment bank] about how great it is to work here, even though we all seem to be doing two or three people’s jobs,” complains one Deutsche technologist. “At one all-hands, Wharton Hood appeared alongside Pascal Boillat, but shortly after that we were told that Boillat was leaving for a bank in Australia. It feels like no one is being upfront about potential redundancies or what happens as a result of Brexit.”

Deutsche Bank declined to comment for this article, but the bank has had some notable technology successes in the past year, including the stabilization of its critical systems (which are now running a record 99.98% of the time) and the launch of a Symphony chatbot.

The senior exits come amidst some modest hiring at MD level (eg. Tom Spreutels joined in May as head of FIG corporate banking coverage), and a lot of hiring at a junior level. – Business Insider reported in July that Deutsche’s analyst intake is 25% higher this year than last.

Some insiders complain that the bank is becoming over-reliant on juniors as a result: “The people who are leaving are strong performers who were not at risk of being fired,” says one. “A lot of the decent people at Deutsche Bank are interviewing for at least one job,” says another. “It’s becoming a real problem.”

Photo: Getty

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Remember David Fotheringhame? He’s a Cambridge University graduate with a first class degree in natural sciences and an Oxford PhD in computational neuroscience. He also has a first class degree in mathematics from the U.K’s Open University and a Masters in Machine Learning (Dean’s List, top 5%), which he took two years ago at University College London. He’s 47 years old, a former quant trader at HSBC, Lehman and Nomura, and the ex-head of flow trading for electronic fixed income products at Barclays….

After nearly two years out, Fotheringhame is back. Sometime before September 21st, he will arrive at Barclays as a director of data commercialization, a role in which he will earn $190k (£149k).

Fotheringhame’s is not your standard trader-turns-data-guy though. His is a more unusual case of trader gets fired from bank and then compels bank to rehire him through the courts, but courts deem that he needs a role in which he doesn’t have to be registered as a “fit and proper person” and that it might therefore be ok for him to take a pay cut. – Hence the $190k data commercialization job.

It could have been worse: Fotheringhame told the judge he’d be happy with any role within the bank. Barclays didn’t want to rehire him at all. After dismissing Fotheringhame in November 2015 for applying the controversial “Last Look” program, which allows banks to have a last look at client trades and to potentially trade in front of a client’s order, Barclays had tried to argue that Fotheringham had created a “distrustful and closed” environment in his team, that he was “not professional or collaborative”, and that he was misusing last look as a profit-making opportunity. It even lined up several executives to explain that they couldn’t rehire Fotheringhame under any circumstances.

Representing himself, however, Fotheringhame successfully convinced the judge that Barclays was wrong. And so he is returning, victorious, as director of data commercialization, a role in which he will earn a fraction of what he was on before. Bloomberg notes, however, that Fotheringham’s new £149k role pays him a lot more than the £83.7k he would have been entitled to as compensation for unfair dismissal in the British courts. It also allows him to reinvent himself as a data expert – and other banks need plenty of those. Barclays is likely to be no more than a stepping stone for the clever ex-trader.

Separately, Citi’s traders have been found wanting. Proprietary trading was, needless to say, banned by the Volcker Rule in 2013, but some traders at Citi have been engaging in it all the same. Worse still, they have been engaging in it, making losses of $81m and escaping detection because of Citi’s lax controls. This all happened between 2013 and 2016, but Citi was yesterday compelled to pay a $10.5m fine for their wrongdoing.

Meanwhile:

J.P. Morgan’s presence in Bournemouth hasn’t shrunk because of Brexit, but it hasn’t expanded, either. All the new jobs seem to be going to Poland, where it’s much cheaper to employ people. (Bloomberg)

The female graduate at UBS who says she was raped by a former senior male member of staff at the bank has reported the case to the police. (Financial News)

Morgan Stanley hired Larry Wilson, the former head of distribution and marketing of structured investments at J.P. Morgan. (Bloomberg)

Deutsche Bank’s credit team made has made $45 million this year under head trader Niru Raveendran, with a quarter of those gains coming just in the past week across bond and derivative trading. The central and eastern Europe, the Middle East and Africa, made more than $10 million on Aug. 10 when the Turkish lira plunged the most in almost two decades. (Bloomberg)

Nomura decided structured solutions are the route to glory. (Global Capital)

London-based RBC staff claim to have been dismissed without due process after highlighting legal and compliance problems across a range of businesses in cases spanning several years. (Financial Times)

Is the Internal Revenue Service tipping off members of Congress so they can profit from insider trading? (NY Post)

How to spot a narcissist. (BBC)

Taking Adderall may degrade your working memory and confidence in your abilities to problem solve, complete tasks and interact with others. (BPS)

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Have you worked in the emerging markets (EM) team at BNP Paribas? Following revelations this week, you may either be considered hot property or a potential liability. Either way, it seems that banks like Goldman Sachs are interested in your talents.

Ex-BNP Paribas traders were behind the big known profits and the big known losses relating to the economic turmoil in Turkey. Tolga Kirbay, a director level EM credit trader at Barclays is understood to have faced losses of $19m on a Turkish bond bet last week. Conversely, Niru Raveendran, the head of central and eastern Europe, Middle East and Africa (CEEMEA) credit trading at Deutsche Bank, is understood to have made around $12m in the past week on a similar trade.

Both men worked for BNP Paribas previously. Kirbay left the French bank after six years in April and joined Barclays soon after that. Raveendran cut his teeth at J.P. Morgan for ten years, before spending two years at BNP until February 2015 and then setting up his own fund. He joined Deutsche in October 2017, in what now looks like a fortuitous move for the German bank.

BNP’s macro trading team is generally considered to be one of its strongest, and ranked fourth to sixth globally last year according to Coalition. However, BNP’s trading performance wasn’t the best in the second quarter, and the French bank has been losing key staff from its EM business. Mary Egundebi, one of its top emerging markets salespeople in London, left for Standard Chartered in July, for example, while Simon Birch – BNP’s former head of central and eastern Europe, Middle East and Africa (CEEMEA) fixed income trading, joined hedge fund Highbridge Capital Management in February.

Amidst the drama surrounding BNP’s EM escapees, another former member of the team has quietly arrived at Goldman Sachs. We first reported that Ivan Levchenko was off to Goldman Sachs in June. Now it seems that the ex-BNP head of CEEMEA distribution has landed at the America bank as an executive director, just in time for the next leg of the Turkish crisis. Levchenko previously spent nine years at BNP. While he’s in sales rather than trading, Goldman will be hoping he proves even half as lucrative as Raveendran at Deutsche Bank.

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The next time you’re looking for a gig that’s in finance, but not so much in finance that it comes with finance-style working hours and stresses, you might want to look across to the CFA Institute. The not for profit organization which runs the finance industry’s preferred exams is a pretty big payer when it comes to its own staff, and the hours they work seem to be very modest indeed.

The chart below, pulled from the Institute’s proxy statement for 2017 details the generosity that’s going down. Basically, if you make it to the top levels of the CFA Institute you’re going to be earning upwards of $400k – unless you work in compliance, risk and ethics, in which case you’ll be earning a bit less.

Although the sums in the chart aren’t exactly comparable to a senior sales and trading job in an investment bank, they’re not exactly miserly either. The CFA Institute is particularly generous with its base salaries, which average out at $324k. Nor does anyone appear to be busting a gut to earn this amount: the Institute’s 2017 tax return clearly states that most individuals on the list below worked an average of 40 hours a week last year. (Of course, this may be a contractual minimum – it’s possible that the CFA’s execs put in more hours than the tax statement suggests.)

Aside from the comparative paucity of compensation in the ethics department, the CFA Institute is notable for paying its APAC MD, Nick Pollard, 23% more than its MDs for EMEA and the U.S.. APAC is, after all, where the growth is for the CFA Institute, and Pollard appears to be being paid accordingly.

Needless to say, the pay figures below are just the CFA’s executives. – And as an organization with operating revenues of $313m in 2017, the Institute undoubtedly feels perfectly justified in paying its top people well.

That generosity may extend further down the hierarchy: according to the most recent tax return, the CFA Institute employed 229 people earning more than $100k last year and spent $92m on wages and salaries. This was equivalent to 32% of its revenues and 34% of its costs.

Photo: Getty

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The Wall Street Journal had an interesting piece over the weekend about “straders”. It’s an unlovely portmanteau word, combining “strategists” (Goldman Sachs speak for quants) with “traders”. A more descriptive term might be “traders who also write computer code”. After all, we don’t call regulatory capital compliance specialists in FIG investment banking teams “complankers”, or tax specialists in prime brokerage business “trokers”.

Although the word is a bit of a nightmare, the concept is very interesting. It has its roots in a decision taken by the SEC in 2016 in the wake of some of the flash crashes on a variety of markets that year and the demise of Knight Capital Group in 2012. The SEC thought that, to protect the market from rogue code, anyone responsible for designing or operating an algorithm that was connected to the securities markets would have to be licensed themselves as a securities trader. In that way, not only would the SEC be able to exercise a bit of control by pulling people’s licences if they turned out to be no good, they would be able to ensure that the algorithms were being run by people with at least a bit of street smarts and industry knowledge.

Steven Korn of GS was one of the first coders to take the SEC exam and qualify, and now there are over 200 traders-who-code working at Goldman alone. Citigroup has allowed employees to cross the divide from the other side by sending experienced traders on coding “boot camps” to learn basic Python programming skills. Far from getting resistance to the concept, they have found that even veteran money makers have been willing to take as much as three days away from the floor, and demand for the courses has greatly outstripped supply.

Of course, it’s open to question to what extent the traders have really been writing operational code, or indeed to what extent the creators of algorithms have been put in charge of final decisions on risk taking. In many contexts, the true value of having each side learn a bit about each other’s work is the “b.s. factor” – once you understand something even a little bit, it’s much harder for someone to bluff you on that subject. Improving communication seems to be a big part of the motivation for blurring the lines between the two disciplines, as UBS has found when it introduced “scrum teams” of programmers and traders working together to implement new functions on its system.

Or maybe it’s just that “being able to code” isn’t as much of a secret elite skill as it used to be. Emanuel Derman, in his autobiography “My Life As A Quant”, records that when he was inventing the modern discipline of quant analysis, the lion’s share of his working time was spent programming user interfaces so that the algorithms developed by his team could be used by others. He had to do this because he was the computer expert – there was nobody to delegate it to. Now that we have user friendly computer languages and web-based design packages, there is much less reason for all technology to be delegated to a special class of technically qualified experts.

Separately, Schroders plc has a fairly unusual recruitment issue. With the impending retirement of Bruno Schroder from the board, the company has to consider Bruno’s wish that he should be succeeded by his daughter, Leonie Fane. In a normal company, this would be frowned upon as nepotism. Schroder is meant to be one of the non-executive directors, overseeing the management of the company in the interests of its shareholders. How can that duty be consistent with passing on the post from one family member to another?

Well…on the other hand, while we talk about “shareholders” in the abstract, in the case of Schroders plc, the Schroder family owns 48% of the company. You can see why they might feel like this level of ownership, plus the fact that it’s their name above the door, might entitle the Schroders to a board seat. Although analysts and corporate governance specialists are not too happy about the idea, they seem to be less concerned by the general principle that the family should have a board seat, and more concerned by the fact that (unless you count the Red Squirrel Survival Trust or other charity boards) Fane does not seem to have much in the way of relevant experience. At present, no retirement date has been set for Bruno Schroder, but if this is the plan, considerable due diligence will be required.

Meanwhile

Arnaud Vagner, formerly of Noble Group and most recently of “Iceberg Capital”, the whistle-blower research analyst whose reports were partly responsible for the writedowns and share price collapse of his former employer, has given his first in depth interview. He claims to have had no short positions and not to have benefited from Noble’s troubles. He’s gone public because he is launching a legal challenge to Noble Group’s restructuring plan, on the basis that “bad companies ought to die”. (Bloomberg)

Kweku Adoboli is still intending to fight his deportation order, despite being denied permission to seek judicial review earlier this week. He has appealed to the Home Secretary Sajid Javid, saying that as a former Deutsche Bank employee, Javid ought to appreciate the pressure exerted by banks with a lax compliance environment. (Guardian)

Crispin Odey is on the way back! Although still considerably below high-water mark after the horror years of 2016 and 2017, Odey Asset Management is the top performing hedge fund for 2018 year to date. (Financial News)

In Australia, a movement back into the game from someone who got out – former Deutsche managing director Mark Davis had moved to run the local operations of Western Union, but is now coming back to run the Australian equities business. (AFR)

Did GAM move too quickly in very publicly suspending its top fund manager Tim Haywood and liquidate the bond funds he managed? Analysts covering the stock are suggesting, after a 20% share price plunge, that they may have done. The chief executive, Alexander Friedman, is now seeing his own position questioned. (Financial News)

Extraordinary story of the question of how one of India’s richest healthcare-and-finance groups ended up losing as much as $2bn in its dealings with a religious group. (Bloomberg)

With MiFID squeezing research revenues, consolidation talk is being revived among the UK’s small- and mid-cap stockbrokers. (FT)

RBC has whistleblower problems in London, with five more complaints coming to light at the regulator after an employee won an unfair dismissal case. (FT)

Image credit: StephanHoerold, Getty

My son was offered a graduate job in a small global macro hedge fund in Mayfair in London. How do I feel about this? I’m delighted! The offer followed a successful summer internship as a quantitative analyst for which he was one of 350 applicants.

So, why was he returning to the final year of his BSc in maths with this amazing offer and the other 349 applicants not? Good question. Is he super aggressive and hyper competitive? Certainly not. In fact in my opinion he is a lovely young man. A very determined and driven lovely young man, but I may be biased.

Let me take you back to the start. He was born in the north of England into a family without links to the financial sector and was educated in the state school system. From a very early age he loved learning. He could read and was familiar with numbers well before his fourth birthday and when he learnt that they could be added, subtracted, multiplied and divided he was overwhelmed with joy. I was always amazed by his approach to problem solving. He would apply potential solutions and adapt these to get the desired outcome, a kind of junior algorithmic approach.

He had his multiplication tables nailed soon after starting school and enjoyed learning about new things in various classes. So was he the weird loner boffin kid sitting on his own at playtime reciting his 12 times table? Not at all. He loved making friends and was and is a loving and caring son and sibling to his younger sister, who is currently making waves in the fashion world (but that’s another story).

It is common knowledge that getting over the first hurdle in applications to competitive financial roles requires a string of top grades and ideally attendance at a top university. As he progressed through school my son was unclear on what he wanted to do as a career, but was committed to academic success. He knew this would give him the best chance, whatever he chose to pursue. He and his friends were competitive in a friendly way but his main competition was himself. He knew he couldn’t be top of the class in everything but strove to continuously perform better than before while allowing time to pursue other interests and relax. This helped him to achieve the grades he wanted while learning to prioritise and manage his time effectively. He achieved the exact grades required for his first choice of university course, the exact mark needed to gain a distinction in grade 8 piano, and he didn’t get a single point higher than necessary to pass his driving theory test. If that’s not efficient application of effort I don’t know what is.

During his mid teen years my son discovered one of his greatest passions in life… poker. He read numerous books on strategy before applying these himself to beat all his friends. He was definitely obsessed with the game and playing it helped. Poker meant he developed skills like decision making, problem solving, communication and taking calculated risks while being risk averse. It’s no secret that some successful poker players are also big hitters in the financial sector. It helped too that while preparing for the interview my son discovered the Chief Investment Officer of this fund he’s received an offer from was also a successful poker player. This lead to an interesting discussion during the interview which certainly didn’t harm his chances.

So no, you don’t need to be a well-connected member of the elite to get a job at a top fund. Nor do you need a long list of banking internships. A relative lack of work experience, except a couple of Insight Days with bulge bracket banks, didn’t hold my son back.

The selection process involved sending a CV and cover letter, then a telephone interview with on the spot maths tests. Successful candidates attended 1:1 interviews with various staff and programming/statistics tests. He felt he clicked with everyone he met, which is important in a small team, and was delighted to be offered the position.

To conclude, is this a ‘how to’ guide for aspiring future parents of hedge fund professionals? Not really. All I ever wanted was for my children to pursue careers they enjoy, and that pay enough to allow them to live well, so if my son is happy with his career choice, then so am I.

Graham Brown is the pseudonym of a proud father

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“The world might see you through one lens: a star during game time. We know you’re more than that…more than a name, more than a role model, more than a jersey, more than a superstar.” No, that’s not the script of the latest Nike commercial. It’s part of Goldman Sachs’ pitch aimed at millionaire athletes that it hopes to court under a new strategy within its private wealth management unit.

The new platform, known as Sports and Entertainment Solutions, was quietly launched earlier this year, according to sources close to the bank. It’s said to be aligned as more of a new strategy within Goldman’s existing private wealth management division rather than its own siloed business unit.

The firm recently began circulating a two-page PDF seen by eFinancialCareers designed to woo high-net-worth athletes. Outside of investment management, Goldman touts services like assisting athletes with charitable campaigns, managing their liquidity needs and helping them improve their knowledge of financial markets.

“We’re also best positioned to offer meaningful introductions to expand your network and access,” Goldman noted in the document.

Former New York Giants all-pro defensive end Justin Tuck was hired by Goldman Sachs in July as a VP within its private wealth management unit. It’s unclear whether Tuck is concentrating his efforts on the new strategy, though it would certainly make sense considering his former career. Earning his MBA from Wharton in May, Tuck also runs a charity aimed at helping educate low-income children that included a partnership with Citi, according to LinkedIn.

The move coincides with Goldman’s more general push into private wealth management. The firm hopes to increase headcount within the division by 30% over the next two-plus years, outgoing CEO Lloyd Blankfein said in February. The bank employed roughly 700 private advisors at the time.

Goldman isn’t the first firm to launch a superstar-focused wealth management unit. Morgan Stanley operates a Global Sports & Entertainment (GSE) division that caters to professional athletes as well as musicians and actors. Goldman’s similarly-named platform suggests that it too could begin targeting Hollywood talent, though the marketing materials seen by eFC were specifically focused on athletes. Goldman Sachs confirmed the launch of the new platform but didn’t respond to requests for details on the strategy.

Follow @BeecherTuttle

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Rishi Ganti has poached another former colleague from hedge fund giant Two Sigma to help manage his highly-alternative private equity funds. James Lavelle, a former senior vice president who spent the last eight years at Two Sigma, joined Ganti’s Orthogon Partners as a partner in August.

Lavelle and fellow partner Brian Lee worked together at Two Sigma, where Ganti managed the personal wealth of its two co-founders, David Siegel and John Overdeck, before founding Orthogon Partners in 2016. Ganti has since made a name for himself by avoiding traditional liquid markets in favor of esoteric, non-market assets.

In a 2017 interview with Bloomberg, Ganti warned money managers that “algorithms are coming for your job – they only ask for electricity.” He suggested at the time that hedge fund managers weren’t recognizing their own career mortality. “They’re anesthetized,” he said.

Looking to gain an edge on computer-reliant rivals, Ganti said he targets alternative investments that can’t be seen by algorithms – assets that require “high human capital” to unearth. So far, these have included providing interim financing for refugee camps in Italy and paying cash to collect judgments due at Brazil’s supreme court, among others, according to Bloomberg.

Ganti received his PhD and JD from Harvard. He’s also a CFA charterholder and speaks six languages, according to a recent bio. Orthogon’s portfolio was said to have gained 10% last year through November 30.

The good news for Lee and the newly-hired Lavelle is that they probably have decent job security considering Ganti’s seeming distaste for traditional investments that can be gamed by algorithms. Employees at Orthogon Partners are unlikely to be replaced by a quant any time soon.

Follow @BeecherTuttle

“”

More bad news from Deutsche Bank’s cost-cutting program. James von Moltke, Deutsche’s chief financial officer, is encouraging employees to “take every opportunity to restrict non-essential travel”. Veterans of troubled investment banking franchises will always recognise this statement, and it’s usually a bad sign. That and the close cousin, restricting business class travel to senior ranks, or extending the minimum duration for a business class ticket to slightly more than the average transatlantic flight. It’s a common sign of a cost-cutting program that has taken on a life of its own, and which is being regarded as a more important objective than the business it’s meant to serve.

All the mischief is contained in that little phrase “non-essential travel”, and the question of what it is that makes a trip essential. Very few people take business trips for the fun, and almost no investment bankers under the age of 30 (not only is this when family considerations start to matter, it’s the rough point in the age and career ladder when an average business hotel room is no longer nicer than your house). People travel in banking because they have to, not because they want to.

The travel budget is the sales and marketing budget. If it was explicitly designated as such, it would be obvious that it shouldn’t be subject to the same kind of restriction as fruit bowls and free breakfasts. But for some reason, foreign travel is still seen, by people in head office who don’t do it very often, as a perk rather than a chore.

If a banker is worth his or her franchise, the value generated, over a reasonable forecast horizon, from a trip to meet clients will be multiples of the cost of the ticket and hotel. If the banker can’t generate enough revenue to cover the cost of the trip, then the problem is the bad staff or bad franchise, not the travel budget. And clients need to be seen.

Partly, they need to be seen because there are some things you can’t communicate over the phone. Even in a world of algorithms and data based decisions, investment banking is a people business, and most revenue-related decisions come down to matters of personal trust. We are human beings, and we prefer to trust people who we have seen, touched, spoken to face to face (and potentially, at the back end of a week-long marketing trip, smelt).

But even if video conferencing technology was perfect, there would still be a reason for travelling to meet clients. And that reason is that in some cases, the trip itself is a message. If you fly half way around the world to give a half hour presentation that could have been done by phone or email, the main message that you’re conveying to the client is “hey, I think you’re so important that I’m prepared to take three days out of the office, sleep uncomfortably and away from my family, and feel awful with jet lag”. You can fake all sorts of sincerity, but the glazed redness round the eyes that comes from a really bad overnight flight is a signal of commitment that clients will always appreciate.

So it could be that Deutsche is making a mistake. Meeting the cost targets is no doubt important to James von Moltke. But the old proverb of the advertising industry is that when you cut the sales budget, a terrible thing starts to happen. Nothing.

Some other people who might be cashing in the airmiles next month are the former employees of Lehman Brothers, among whom a group email is currently circulating to organise a global reunion on the tenth anniversary of its insolvency, 15 September 2008. It will be, as reunions are, a chance to see who’s gone bald, who’s still hot, who got a better job and who dropped out to go surfing in Goa, but also to reminisce about the corporate culture that led to one of the biggest collapses the industry has ever seen.

The plan has generated a bit of outrage from people (including the Northern Rock Action Group and the UK’s Labour Party) who seem to believe that every former Lehman employee ought to be hiding their past in shame. But it’s hard to begrudge the staff their party, and even their touch of bleak humour. From junior associates to managing directors, the vast majority of Lehman staff bore roughly no responsibility for the decisions that led to its downfall, and given the very stock-heavy and deferred compensation policy the firm used to run, most of them lost considerably more from its collapse than the people who are berating them for having a reunion.

Meanwhile

Returning to the theme of potential false economies, the UBS “mega merger” restructuring of its wealth management division is coming in for criticism. Analysts are still puzzled as to how it will work, whether it really delivers value for clients and whether the cultural divide between the global private bank and the former PaineWebber brokerage in North America can really ever be bridged. (FInews)

Many firms have blurred the lines between coders and traders, but JP Morgan is now launching a team to bring algorithms and digital prowess to advisory and capital markets work too. Using programming techniques to automate the traditional analysis of shareholder registers for activists, timing and distributing capital issues and even for bookbuilding, JPM hopes to gain a competitive advantage. (Bloomberg)

Credit Suisse has always played catch-up in Asia against the powerhouse wealth management business of UBS. Tidjane Thiam’s team now, however, see an opportunity as the industry’s centre of gravity moves away from the traditional hubs of Singapore and Hong Kong and toward onshore franchises in the main Southeast Asian economies themselves. (Bloomberg)

Alex Abagian, of Morgan Stanley in Hong Kong, has been given a promotion with his role expanded from head of Asia-Pacific equity syndicate to co-head the entire regional ECM business (Global Capital)

Goldman Sachs is encouraging its employees to spend time on the road, and is serious about retaining its female staff. The bank is now even paying for bankers who are nursing mothers to have their breast milk collected from their hotel rooms, frozen and delivered back home. (Evening Standard)

Financial News has an in-depth interview with the complainant in the UBS alleged rape case. (Financial News)

Viktor Hjort, who was formerly at Brevan Howard and who stood for election as a Liberal Democrat councillor, has joined BNP Paribas as the global head of credit strategy and desk analysts. (Financial News)

The Goldman Sachs transaction where the bank bought bonds from Venezuela’s central bank attracted widespread criticism last year. Now it is losing money too. (Financial News)

Image credit: JGalione, Getty

I’ve spent the past two summers working in the technology divisions of major investment banks. As a result, I have a pretty good idea of what it’s like to join a big banks’ technology program as an intern. I also know that it’s not what a lot of people expect before they join.

The first thing you need to know is that banks’ technology programs are not actually that technical. Believe it or not, but a knowledge of programming is not necessary for a lot of technology roles in banks. When you’re doing a technology internship you’ll often work as a business analyst (BA). As such, you’ll usually liaise between the front office and the back office of the bank, usually undertaking a project management role or helping out in a related capacity.

The second thing you need to know is that you probably won’t get much in-depth coding training when you’re an intern in bank. Most interns expect they’ll ave some sort of coding training, or will be split into groups depending upon the language they’ll be using. This doesn’t happen. Training typically focuses on soft skills and if you get technical training at all it will focus around methodologies lie Agile. What you learn in terms of coding will therefore probably be picked up on the job. If you’re using a new language. you’ll have to get yourself clued up on the first few days and this can be a steep climb.

The third and maybe the biggest misconception about technical internships is that banks will have work to do when you get there. This is not always true: there is always a sizeable number of interns who are not initially assigned work, maybe because their managers have changed. If you’re one of these unlucky ones and your manager is busy or has not prepared a solid plan of work, it will be up to you to navigate and to look for projects you can bring to your manager. This often comes as a huge surprise.

If you survive the internship and receive a full time job offer, it’s likely to be open-ended to the extent that many banks rotate their full-times hires through developer, testing and business analyst roles before deciding which suits you best. Even if you don’t like one of those options, you’ll have to put up with it before you get a chance to move on.

Steven Lee is the pseudonym of an intern on an technology programme at a bank in London

If you ask someone at a big bank for career advice, they will usually answer that it is best to work for a bulge bracket. However, if you ask someone at a boutique, they too will likely favor their own career path. So, who is right? That depends mostly on you. For me, a small boutique aligned with my true motivations.

A friend who switched from a major bank to a boutique once referred to boutiques as a “tailored suit.” While big banks often offer the full range of products and make a lot of pointless “pitches,” boutiques are often much more focused on projects that generate sales. Often, I get the impression that people go to a bulge bracket because of the big name. You should think about your own motivation and be totally honest about what’s important to you.

I find that boutiques are much more entrepreneurial than bulge brackets, but many are also more selective, even if they lack the name recognition of bigger full-service banks. This is because most boutiques do not offer any other products apart from advice. Therefore, they are dependent on selecting top employees for the one specific product. The quality of boutique employees is measured by how hands-on they are. For some boutiques, there is often limited formal training, so people already need to know how things are done and be able to hit the ground running. This also results in more responsibility early on.

Names aren’t everything, junior

While an elite boutique is often as exhausting as a bulge bracket, working at smaller boutiques can be a lot more enjoyable in terms of working hours and colleagues. For smaller boutiques, gaining entry can ironically be even easier than at larger boutiques and at big banks. Smaller boutiques often bring on a lot of interns for their size because they do not have strong HR teams and are therefore less committed to structures and more entrepreneurial. If you are good, you have a better chance of standing out.

If you are looking to land a junior position at a boutique, you don’t necessarily need to have interned previously at an investment bank, though having gained experience in comparable areas is certainly advisable. These include auditing or similar matters at the Big 4 or other accounting firms, where advice accounts for a large proportion of the work. Once you’ve completed a first internship at a smaller boutique, you can also apply to the elite boutiques.

When it comes to interviews, it’s a good idea to work out why you want to work for a boutique and not a bulge bracket. This is one of the first questions you’ll be asked. Reasons could be that you prefer client-facing or that you want to be fully committed to M&A or a specific niche group to which you are applying.

At the end of the day, smaller and larger boutiques usually differ only in logo, deal size and working atmosphere. Otherwise, it’s pretty much the same.

Mark Davis is a pseudonym for a senior banker who now works at a boutique after having previously been employed at a major international bank.

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If you just passed Level I of the CFA exam, congratulations. You’ve got about 10 months to prepare for Level II. However, you may need to start studying a bit earlier this time around. The CFA Institute threw a bit of a wrench in the system by announcing that it is adding questions on fintech, cryptocurrencies and blockchain for Level I and Level II beginning in 2019. It gave us a sneak peek into the curriculum; there is some good news and some bad news.

The sample questions below were included in the readings for both levels. A quick glance will tell you that you won’t have to take an incredibly deep technically dive into crypto or blockchain, though the correct answers aren’t necessarily obvious. The potential cause for concern is for Level II candidates, who will need to be able to answer questions like the practice ones below while also preparing for a crypto-related case study within the infamously-difficult ethics section of exam. The ethics curriculum for Level I doesn’t include any mention of fintech, crypto or blockchain. Either way, both groups will at the very least need enough knowledge to answer questions like these, courtesy of the CFA Institute. Click here or the link below the questions for the correct answers and a short explanation.

1. A correct description of fintech is that it:

A: is driven by rapid growth in data and related technological advances.

B: increases the need for intermediaries.

C: is at its most advanced state using systems that follow specified rules and instructions.

2. A characteristic of Big Data is that:

A: one of its traditional sources is business processes.

B: it involves formats with diverse types of structures.

C: real-time communication of it is uncommon due to vast content.

3. In the use of machine learning (ML):

A: some techniques are termed “black box” due to data biases.

B: human judgment is not needed because algorithms continuously learn from data.

C: training data can be learned too precisely, resulting in inaccurate predictions when used with different datasets.

4: Text Analytics is appropriate for application to:

A: economic trend analysis.

B: large, structured datasets.

C: public but not private information.

5. In providing investment services, robo-advisers are most likely to:

A: rely on their cost effectiveness to pursue active strategies.

B: offer fairly conservative advice as easily accessible guidance.

C: be free from regulation when acting as fully-automated wealth managers.

6. Which of the following statements on fintech’s use of data as part of risk analysis is correct?

A: Stress testing requires precise inputs and excludes qualitative data.

B: Machine learning ensures that traditional and alternative data are fully segregated.

C: For real-time risk monitoring, data may be aggregated for reporting and used as model inputs.

7. A factor associated with the widespread adoption of algorithmic trading is increased:

A: market efficiency.

B: average trade sizes.

C: trading destinations.

8. A benefit of distributed ledger technology (DLT) favoring its use by the investment industry is its:

A: scalability of underlying systems.

B: ease of integration with existing systems.

C: streamlining of current post-trade processes.

9. What is a distributed ledger technology (DLT) application suited for physical assets?

A: Tokenization

B: Cryptocurrencies

C: Permissioned networks

Click here for the answers

Follow @BeecherTuttle

““

When ex-Barclays trader David Fotheringhame won a legal case last week compelling Barclays to rehire him, it was billed as a personal triumph for a man who’d been fired by the bank in 2015. Fotheringhame, representing himself in a UK employment tribunal, had successfully taken on the might of Barclays and its legal team. Barclays, which had dismissed Fotheringhame for applying the controversial “Last Look” program, accused him of creating a “distrustful and closed” environment in his team, and lined up several executives to explain why they could never hire him again.

But the case has ramifications beyond Fotheringhame’s career. Legal experts now say that other British bankers who are suing their former employers for unfair dismissal should also consider asking for a job rather than a cash payout. This is because compensation for a standard unfair dismissal (in which there’s no discrimination or whistleblowing) is normally capped at £83k ($107k) in the UK.

In the finance sector “people’s earnings are so much greater than the cap”, Samantha Mangwana, an employment lawyer at CM Murray in London, told Bloomberg. “The best financial remedy is to go back to the work,” added John Marshall, an employment lawyer at Slater & Gordon. “You’re treated like you never left, all back pay is due and you’re made whole.”

Reinstatement isn’t yet a popular option in the UK and employers typically argue that it’s unfeasible, especially at senior levels, because trust in the former employee has long since broken down, reports Bloomberg. But Barclays trotted out the trust argument in the Fotheringhame case – and lost.

Separately, as we revealed in June, JP Morgan’s investment bank has been developing a new online platform to crowdsource large amounts of data and let its clients exchange and store sensitive data that’s not in the public domain. Now Business Insider is reporting that the initiative, called ‘Roar by JPMorgan’ and seen as one of the most cutting-edge tech projects ever undertaken by the bank, is being led by Samik Chandarana. JPM has gone for a safe pair of hands with Chandarana – he’s been with the firm for 19 years and was appointed as head of analytics and data science for the corporate and investment bank last October. The Roar team is currently recruiting, and as we noted last year, Chandarana likes hiring people who “know how to work with customers” and are “like-minded” rather than pure “book-smart” talent.

Meanwhile:

Philip Noblet, HSBC’s top UK dealmaker, is joining Jefferies. (Financial Times)

Struggling hedge fund Brevan Howard is cutting costs by getting rid of space it previously used as a kitchen, gym and private reception area. (Bloomberg)

Like Goldman Sachs before it, Morgan Stanley has dropped its coverage of Tesla, prompting rumors that Elon Musk may actually be pushing forward with the privatization deal. Reports suggest that Morgan Stanley may be representing Musk or Tesla’s board. (Seeking Alpha)

Credit Suisse has appointed a new head for its equity-linked debt business in EMEA. (Global Capital)

Barclays has poached one of Goldman Sachs’ top electronic trading engineers. (Financial Times)

HSBC’s previous head of sustainable bonds EMEA, Victoria Clarke, is joining Barclays. (Reuters)

Does this woman have the world’s toughest regulatory job? (Financial News)

Why Britain should not deport UBS rogue trader Kewku Adoboli. (Evening Standard)

Barclays has launched a ‘lawtech’ hub in London. (Legal Cheek)

Vanessa Colella, Citi Ventures’ chief innovation officer, reveals the top-10 innovations that could shape the future. (Yahoo Finance)

Have a confidential story, tip, or comment you’d like to share? Contact: smortlock@efinancialcareers.com

Follow @simonmortlock

Image credit: skodonnel, Getty

Investment banking is an industry in which nothing is certain. It also one in which people are usually refreshingly upfront about the fact that they’re in it for the money rather than to change the world. Even so, investment banking recruiters do like to see consistency and commitment. If a job candidate has moved around too much; it might signify a lack of loyalty, or problems working with people. Or it might be something worse; the regulators are always concerned with the problem of “rolling bad apples”, the employees who, rather than being fired or reported for compliance breaches, are allowed to quietly resign and go to another job, avoiding any public scandal.

So, if you have so many past jobs that you need to ask for an extra sheet of paper to fill in the five year employment record, it tends to come up in interviews. I know this because between 1998 and 2007, I had no fewer than six different jobs in equity analysis, some of them at brokerages that no longer exist (Robert Fleming, Cazenove, ABN Amro, Lazard Panmure Gordon, Exane BNP Paribas and Credit Suisse, if anyone’s counting).

By the end of the period, this jittery track record was the main subject of my interviews, so I got pretty good at coming up with explanations. The following explanations are those that seemed to work. To save historical blushes, I won’t say which ones applied, to which houses.

“The brokerage closed down or got taken over”

Everyone regards this as fair enough. If you’re at a sufficiently junior level that the failure can’t be realistically attributed to anything you did, it shouldn’t be too much of a blot on the resume. A big restructuring always shakes people loose. In a couple of cases, I had actually been offered a job in the merged firm, but since I had started my job-hunting process as soon as the deal was announced, I ended up leaving anyway. Employers tend to understand this.

“It was just too good an opportunity to turn down”

That’s the polite way of putting it. I once had a successful interview in which the entire exchange consisted of the head of equities asking “Why have you moved around so much” and me replying “People kept offering me more money”. If your job moves are mainly made up of cases where you either took a promotion, or moved from a smaller firm to a good brand name, just say so. This tends to be seen not as evidence of disloyalty, but that you had ambition and that other companies in the past have regarded you as under-placed.

“It was impossible to go on there”

This is significantly more tricky. In general, it’s a bad idea to criticise former employers; it makes you look bitter and as if you are blaming other people for your problems. But this isn’t a completely airtight rule. There are a few places in the industry which are widely known to be toxic environments and which have a reputation for high staff turnover. If you are absolutely sure that this was the problem, and you genuinely believe that other people would agree with your assessment of the house that you left, you can sometimes get away with this. It helps to do a bit of research on the person interviewing you, because if they have ever worked in the same hell-hole, this can even be a bit of a bonding factor between you.

After this period, I ended up staying with the same team for eight years, which I hope shows that Credit Suisse were right to accept my rationalisations. It was getting a bit ridiculous toward the end, and I don’t necessarily recommend a move every eighteen months as the best way to build a career. But my experience was that it was nothing like as much of an obstacle as I was told it would be by HR people who had an obvious conflict of interest. It certainly shouldn’t be the reason for a young person to turn down a great opportunity.

Dan Davies eventually retired from equity analysis, after having worked for nine firms in fifteen years.

““

I worked in sales jobs at both Morgan Stanley and Goldman Sachs in London. If you haven’t worked in a banking sales role before and are thinking of applying, let me tell you that it is probably not what you’re expecting.

The job is not about being good with people. Content, expertise and reliability matter more.

When you work in a sales job in a bank, uour clients will deal with you if you are nice to them, but over two equally nice people they will choose the one with the greatest technical knowledge, context and reliability. A salesperson that knows his trade and is there for the client day after day will go a very long way. As with most things in life, consistency and perseverance are among the most powerful predictors of career success. If you think you can build a career solely on the back of buying your clients drinks and expensive dinners, think again.

When you screw up, anything you say beyond “I am sorry” will be too much already

You will make mistakes, and you will make clients and traders angry. Accept it as part of your learning as you grow. When the mistake comes, raise your hand and say “I am sorry”.

Whatever you thought you could say after those initial three words should not get out of your mouth. No half excuses. Apologising should be a quick entry and quick exit process. The bolder you are apologising, the more respect you will gain from your clients and your colleagues.

Clients need you to listen to their needs, not recurring machine-gun pitching

I quickly learnt that a blanket pitch of an idea to all of my clients (the classic Bcc email) would never work. In fact, showing an idea to a client that cannot trade upon it will undermine your credibility.

Clients have different booking systems and risk management limits, and they will focus on some products and not others. Your first responsibility as a salesperson is to know your client’s positions, risk limits, and things he will or will not do as part of his regular trading. Only once you know those things you focus on selling.

I learnt to keep a spreadsheet with all my clients’ positions and currencies they were following at any given time (I was in FX sales). There is nothing more rewarding than calling a client with an update, when market moves are affecting his position, to find him or her away from the desk. Being on top of this stuff will go a long way when building a relationship with your clients.

A good salesperson will solve client problems FAST

Clients also make mistakes. For instance, they may do the deal the wrong way round, selling a stock when they wanted to buy it instead.

When this happens, you have two options: 1) Put yourself in their shoes, minimising the financial impact and the noise, and getting them a quick and fair solution, or 2) Be an ass with zero empathy that hides behind a sad “I have my hands tied” motto.

True fact: when your client screws up (and they will), you have a massive opportunity to take your relationship to the next level. It is down to you to take it, and to show leadership skills in the process. A thankful client will most likely become a great client down the road.

Former Investment Banker & Pro Racing Driver. Performance junkie. More @ rafaelsarandeses.com

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Eyeing a better work-life balance, more graduates of prestigious universities and MBA programs are saying no to investment banking and yes to top consulting firms like Bain & Co., McKinsey and Boston Consulting Group (BCG). At Harvard, for example, roughly 18% of 2018 graduates took jobs in consulting, equaling the number of those who chose to work in finance after earning their degree. While pay isn’t quite on par with what big banks can offer, salaries in consulting have edged up over the past year, though bonuses will never reach the dizzying heights at top banks, private equity firms and hedge funds.

So, just how much will you make in consulting? That obviously depends on the firm. The average take-home pay for analysts working at the aforementioned “Big Three” management consulting firms is around $90k, which includes roughly a $15k bonus, according to Glassdoor. That number beats the industry-wide average pay for first-year analysts at consulting firms by roughly $10k, based on the 2018 figures from Wall Street Oasis. The bigger the name, the better the pay.

As you can see below, total take-home compensation (salary and bonus) has increased at almost every rung of the ladder, with interns seeing the biggest jump in pay compared to when we crunched the numbers a year ago. Analyst and associate-level interns are making well over 15% more than they did in 2017, likely due to the ever-escalating junior recruiting war between consulting firms, tech companies and big banks. The likes of Goldman Sachs, J.P. Morgan, Google and Facebook are now paying interns prorated salaries upwards of $85k.

Meanwhile, pay has increased year-over-year for most every role in consulting, though the upper echelons of management – VPs and MDs – saw a small downtick in compensation. This could be attributed to the fact that consulting firms are allocating more money to rope in the best junior candidates, or it could just be an anomaly due to a smaller sample size when compared to other roles.

One particular note of interest: third-year analysts and third-year associates make a bit less than their colleagues with only two years of experience. While this seems counterintuitive, it actually makes some sense. The same trend is occurring at investment banks, which pay their third-year analysts no more than their second-year analysts, despite the assumed seniority. The reason: those who don’t get promoted after two years clearly aren’t top performers, giving firms no incentive to “reward” their extra year of service.

“In today’s world, if you aren’t getting promoted – at least in name – after two to two-and-a-half years, there’s a reason,” said one New York-based MD.

Check out the total compensation numbers below, courtesy of Wall Street Oasis.

Note: We didn’t have pay information on second and third-year associates from 2017.

Follow @BeecherTuttle

““

Striking out from a banking career to launch your own firm is something that’s only for the most confident among us. If you’ve got a real blue chip of a personal brand, you can get very rich this way, but if your franchise is good rather than great, then you’re likely to find out that fact pretty quickly. Three former Institutional Investor poll-winners are taking a shot at the title this week, reports Financial News, as On Field Investment Research launches as an equity research boutique, run by Mark Stockdale (former head of research at UBS), Arnaud Pinatel (most recently of Moore Capital, before that Exane) and Yassine Touahri (also of Exane). Good luck guys…

The problem that small advisory firms of all kinds tend to come up against is the most basic economics – it’s awfully difficult to get paid. For some reason, people who know that their professional advisors work for money, and who are happy to write a large cheque for an hour with a senior lawyer, tend to be reluctant to pay the same amount of money for an hour’s worth of financial advice that could generate them much more value. The way that the industry has worked over the years has been to try and treat the client as a personal friend, to emphasise relationships over transactions and to suggest options which are in line with existing priorities and beliefs. This makes it awkward for the buy side, as they experience something that feels like a chat with a pal after which you end up being led into an idea that was close to what you were thinking anyway, and then get presented with a bill.

This is less of a problem for the big banks, because they have more scope to bundle different services together, to measure profitability across the bank as a whole, and therefore to accept payment in one division for services rendered in another. Not only does this help to obfuscate the true pricing of any one service, it also handily puts a few layers of separation between the touchy-feely relationship handlers and the debt collectors. It’s even better, of course, if the payoff for five years of advice comes in the form of a big capital markets or M&A transaction, where a truly massive fee can be concealed by making it a smallish percentage of a huge number.

The one advantage that boutiques have comes from their very smallness. If an idea or a piece of analysis comes from On Field, and you’re paying a direct and identifiable fee for it, then you can have a reasonable expectation that the idea has only been given to a small number of clients. If the same idea came from a bulge bracket firm, then it would have lower value precisely because you would expect it to have already been broked all across the Street. The M&A boutiques have a similar value proposition; if you hire them, you can be more confident that there’s no conflict of interest with your competition.

And when the model works, it works well. As Stockdale says, “[in the past] the perception was that if you were a bank at the top of the rankings, the buy-side would pay for your research. In fact, they only wanted a selected number of teams, but took the rest”. If you can take even a percentage of the value of a bulge bracket relationship, and split it between three guys (after paying for an office, compliance etc), then you can do very well. No guts, no glory …

Separately, Brevan Howard is sending out slightly mixed messages. On the one hand, it’s cutting back its office space and not renewing its lease on the ground floor of its office building in London. That means goodbye to the gym, kitchen, meeting area and ground floor reception, with some of these functions presumably relocated to the first-floor space that they will continue to occupy. But on the other hand, it’s not cutting back on fund launches, with a new central bank rates fund to be managed by Fash Golchin, according to Reuters.

It’s the age-old dilemma of hedge fund marketing – what kind of a message do you want your head office to be sending? On the one hand, it needs to speak of success and money making, hence the premium locations and modern art that tends to be seen there. You also want to keep the staff happy so that you can keep attracting the best managers and traders, so the kitchens and gyms are important too. But on the other hand, particularly when performance has been so-so, you don’t necessarily want to draw too much attention to the sort of things that the management fee can pay for. Added to which, most hedge funds are partnerships, so the cost of these things comes straight out of the boss’s pocket.

Meanwhile

Why would a superstar private banker at the “write your cheque” stage of his career decide to leave the industry for a job at an Australian retail fund manager? Perhaps because, despite his success at Credit Suisse, Francesco de Ferrari was never really a company man and more of a manager than a personal fee generator. (FINews)

High stakes for the SEC as they decide whether or not to take action against Elon Musk for market manipulation in the aftermath of the notorious “take private” tweets. If they decide to do nothing, the SEC itself could come in for some harsh criticism.(Bloomberg)

After a political candidate endorsed medical marijuana, Wells Fargo closed her campaign’s bank account. Is this an overcautious KYC policy, or have things gone too far in delegating law enforcement to the banking system. (New York Times)

How do you talk a client out of a bad idea? An American wealth manager shares some of the frequently asked questions he has experienced when his clients start to enquire about Bitcoin and ICOs (Wealth Management)

Layoffs in JP Morgan Chase asset management – about a hundred jobs at risk. (WSJ)

Some good news for Tesla as Deutsche Bank agrees to extend its warehouse loan facility. (TheStreet)

The business of private equity always used to be, according to its publicity material, adding value to companies by shrewd operational management involvement. Now it’s all about deal selection, as private equity investors increasingly take minority stakes without control rights, in order to get into growth companies. (Financial News)

Image credit: borchee, Getty

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