When bankers bankroll entire families (and friends)
Is there a banker in your friendship group? No? - Bad luck. Is there a banker in your family? Again, no? - The fates are not looking benignly upon you. Contrary to their popular image as selfish materialists interested exclusively in positional goods, financial services professionals tell us they're actually spreading the wealth in a generous way. They're providing deposits and paying off mortgages for siblings and parents, they're clearing debts, and they're buying repetitive rounds of drinks for artsy friends in bars.
"It's the nice thing about people in banking," says one managing director who recently left Morgan Stanley, speaking on condition of anonymity. "We care about our communities of friends and families and we often end up being the provider of resources. I know a lot of people in finance who are paying several mortgages to help brothers and sisters who aren't on the same path of making money."
A junior banker at a corporate finance boutique in London, who also declined to be named, said bankers tend to support their networks informally and formally: "Informally, I end up bankrolling my friends whenever we go out - I seem to buy everyone drinks. Formally, a lot of people feel a need to support their families in a dedicated way - especially if their parents aren't professional, or if they come from an emerging-markets country."
Geraint Anderson, the former equities analyst-turned author, said he made various interest-free loans to friends and family while he worked in the City of London. "I lent my brother half the money he needed for a pad in the Czech Republic. I lent my parents money for a house they were buying in France, and I lent a couple of mates £10k," he said. "The thing with banking was that you can make a lot of money relatively young. At a time when your contemporaries are struggling, you have a lot of disposable cash and very few family commitments."
The anonymous author of the iBanker blog said it's not uncommon for people in finance to support their wives' parents, or to lend money to friends who are starting a small business. Occasionally, support for family members is more than mere handouts. Jamie Dimon famously hired his father and then gave him a big pay rise.
However, Anderson says the perception that you work in finance and therefore have a lot of money can be problematic (especially as this is less the case than it used to be). "Money can be such a divisive thing. The perception is that you're rich and what's money to you - it doesn't matter if you're paid back late, or people don't pay back the full amount."
At one point, Anderson said an ex-client called in tears because he was about to have his house repossessed. "It's really hard. People read that you made a lot of money and think you're minted when that's not the case at all."