EDITOR'S TAKE: Is investment banking becoming a career for stupid people?

24 June 2010

2 minute read

EDITOR'S TAKE: Is investment banking becoming a career for stupid people?

One of the great gripes about investment banking in the past was its tendency to attract great minds which were deflected from pursuing activities of superior social worth by the promise of immense pay.

Now that the regulatory screws are tightening, the hope is that those minds will go back to curing cancer and creating perpetual motion machines. Banking will be relegated to hiring mediocre students without the wherewithal to do something more interesting instead.

This is the theory. It is not, so far, the fact.

Next week, High Fliers Research, a UK research organisation which produces (one of) the definitive studies on the career intentions of top students, will reveal the results to its 2010 study. According to managing director Martin Birchall, it will show that students are more enamoured of investment banking careers than previously.

"More people are interested in applying to banking, and there are more vacancies to go around," he divulges.

By virtue of banks' increased recruitment, Birchall say the ratio of investment banking graduate applicants to investment banking graduate places has fallen. This is good, considering that last year it was around 104:1. However, with more students interested in banking careers, Birchall says it's still above the 60:1 ratio of 2008.

This is surprising. Bankers are, after all, the 'scum of the earth.' Equally, the industry no longer promises enormous cash bonuses payable in the year they were earned.

At the same time, the incentives to join other industries are increasing. Renewable energy is, surely, the career of the future. And the first 5m of capital gains from entrepreneurial activities are now tax free.

However, for students leaving university with high debts into an environment of economic insecurity, banking still offers an important comfort blanket. Interns at some top banks are reportedly earning 43k pro rata for their efforts this summer. Only if the class of 2010 is ejected in 2011 will the risks clearly outweigh the potential rewards.

Until then, investment banks continue to have their pick of the best brains.

AUTHORSarah Butcher

Global Editor

fx
fxo trader
27 June 2010
FXTrader - i don't know which bank you work at, but that statement smacks of third tier-ism, and is way out of date. Used to be the case i totally agree with you, but these days, at top shops, salespeople are increasingly the top talent. Believe me, compensation is reflecting this.
(i hope for your sake that, with your attitude you're trading an exotic product, and not spot/forward)
As a more general observation, what makes people working in banking so "stupid" for earning the most money, whilst working in far better conditions than (comparable) people in other industries?
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Ac
AccountingDoc
27 June 2010
I would agree with the other comment alluding to the idea that 'intelligent' (actually quite a difficult concept to define properly!) people can often make dangerously poor decisions. In banking, where one is dealing with so many future unknowns, the ability to construct and confidently articulate an intellectually robust argument does not necessarily make it a strong argument. I've worked in psychiatry where some of the best risk assessments seemed to be made by less academic staff who operated with a superior emotional intelligence and years of life experience. Bankers may scoff at such an analogy but to me, the skills of risk assessments are universal.
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Ho
HolierThanThou
25 June 2010
I think Silky has nailed it.
Sure, these guys (and gals) are undoubtedly "clever" and generally boast an impressive array of qualifications. I'm not sure that many of them have common sense, commercial nous or the ability to socially interact. I guess none of these matters when you're the PowerPoint monkey...
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FX
FXTrader
25 June 2010
Lot of banker bashing and self-loathing (as per usual!).
Grow up ppl, it's a stressful job and it's not easy to make money just by using Fibonacci levels and moving averages, you do have to use your brain.
Now sales on the other hand...
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Si
Silky Johnson
25 June 2010
Based on my observations from the last decade, I'm pretty sure investment banking has always attracted a disproportionate share of graduates that are highly qualified but thick as planks. I'm quite possibly one of them myself!
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