Investment banks that have typically relied on a stream of junior lawyers, consultants and Big Four accountants to replenish their ranks are seeing those talent pools dry up.
For that, you can blame the back-to-office push. Banks that ask traders to return to the office full-time, even if companies have implemented formal hybrid programs more broadly, are losing out.
Other industries with similar hard-charging reputations now offer better work-life balance, executives say. Law firms, private equity firms and accountants from the Big Four – the sectors with which banks compete most – win the top contenders.
The hierarchical and face-time culture has meant that long-suffering juniors spend more than 100 hours a week working on PowerPoint presentations and spreadsheets to help their bosses come up with compelling deals. The reward for those grueling hours is a golden resume – but some aren’t willing to compromise.
According to Rebecca Maslen-Stannage, president of Herbert Smith Freehills, junior M&A lawyers at larger firms are typically “heavily” targeted by bank recruiting teams after three years. But now she said Financial newsthey are increasingly choosing to stay the course in law — and flexible working is a big reason why.
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“They can still be on super interesting deals and be in the thick of those kinds of deals, but not have the concept of face-time that some investment banks have and be able to be flexible about where they work,” says -she.
Banks have worked hard to stem a huge turnover among analysts and associates over the past year. The entry-level salary has risen from around £50,000 to £70,000 at most companies as an increase in business activity has led to a burnout crisis which has seen 70% quit juniors in some banks.
“So outdated, it needs to change”
JPMorgan, Goldman Sachs and Nomura have also launched one-time recruitment campaigns for analysts to strengthen their teams and ease the workload. Recruiters said FN that banks were increasingly turning to accounting and legal firms for talent as well as rivals.
Jonathan Boyers, a partner at KPMG UK who leads its corporate finance practice, said banks keeping juniors in the office until 2 a.m. to 3 a.m. were “so overwhelmed, that needs to change”.
“People don’t want to work like that anymore,” he says. “Several people left for investment banking in the last 12 months and came back. They said it was ridiculous the way they were expected to work.
At Bank of America, Goldman Sachs, Citi and Barclays, among others, a five-day office week with some flexibility is the norm for bankers, dealmakers said. FN. Most JPMorgan traders work four days a week, with more top executives coming in every day.
“Some law firms and the Big Four are much more flexible than investment banks,” said Emanuele Cianci, director of legal recruiter Fox Rodney, who specializes in the financial services industry.
Herbert Smith Freehills asks its lawyers to be in the office an average of 60% of the time, although he said the apportionment was not rigorously enforced. Even US private equity law firm Kirkland & Ellis – which has a reputation as a place where young lawyers can expect to burn midnight oil – has embraced flexible working.
The firm told its lawyers that from March 29, they should be in the office on Tuesday, Wednesday and Thursday. US law firms Shearman & Sterling and Fried Frank told lawyers they could work remotely in August.
The big four accounting firms – KPMG, EY, Deloitte and PwC – also all embraced hybrid working post-pandemic. PwC has told its staff that it can clock in at lunchtime on Fridays in June, July and August.
Meanwhile, private equity firms – which typically hire top banking analysts after two years in the industry – have increased the hiring of juniors over the past year. Gail McManus, managing director of Private Equity Recruitment, said junior bankers are increasingly screening potential employers based on their flexible work offer.
“There’s so much demand that it’s gone from a buyer’s market to private equity firms selling their business to potential employees,” she said.
“Juniors often decide if they want to work for a company after the first interview. Many private equity firms require their employees to be in the office five days a week, but more are realizing that flexibility is a selling point.
Does time spent in the office have an impact on premiums?
Bank executives have long touted the need to bring juniors back to the office, citing a culture of learning and the need to train 20-something bankers in person. Senior negotiators contacted by FN said juniors hired during the pandemic were not as skilled as those who spent their first two years working alongside seasoned bankers.
At the same time, three banking analysts contacted by FN said they were told to be in the office at least four days a week. “But if a senior banker is present on a particular day, the juniors are expected to follow suit,” one said.
Negotiators are under increasing pressure to come into the office full-time when not on a business trip, FN reported. As banks brace for another round of job cuts, it’s important to be seen, they said. The juniors, however, suggest that the behavior of senior bankers means they spend more time in the office than necessary.
“Covid has taught us that we don’t need to hang around the office until 2 a.m. to get things done – it would be nice if they trusted us to finish the job at home,” said one. analyst of a bank of domed supports. .
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However, Claudio Antonini, a former investment banker turned career coach who works with finance professionals, said many juniors were uncomfortable with the blurring of lines between work and home during the pandemic. . He said a client took breaks after the shower to check his emails, while FN interviewed analysts during shutdowns who brought laptops with them during bathroom breaks to stay online.
“They’re anxious because they’re afraid that if their manager doesn’t see them online for a few minutes they’ll think they’re not working,” Antonini said.
“Spending less time in the office means they may be seen less by their superiors, which hurts their next bonus or promotion because there is a lot of face time in banking,” he added.
Boyers said some juniors in KPMG’s corporate finance division realized that working conditions were more important than the lure of higher salaries.
“We’ve had people leaving to go to investment banks for much higher potential bonuses and then coming back because the working conditions were atrocious,” he said.
To contact the authors of this story with comments or news, email Paul Clarke and James Booth