Prop trading is "depressing" if you're not in it for the money. Here's how one BAML MD escaped, and stayed in finance
Ben Rick worked in investment banking for 18 years, eventually reaching managing director, heading up Bank of America Merrill Lynch’s European prop trading division – and then the Volcker rule hit in 2010. The bank shuttered its prop trading operations and Rick was thrust on to the job market.
There were no shortage of new offers – including from BAML – but after a short spell of less than a year as a partner at BTG Pactual, he took the opportunity to do something different. “Most people have a figure in mind when they start in trading at 21 that will allow them to move on, but when you hit 40 that seems further and further away,” he tells us. “Prop trading doesn’t exactly have much of a social impact and it’s purely about making money. While I was fortunate to have worked in the industry for so long, I’d crossed the line so that the pursuit of wealth wasn’t something that got me out of bed in the morning, but had actually started to depress me.”
Rick always had an ambition to get involved with something that would “benefit society and have a positive effect on the community”, but after nearly 20 years in the financial sector he still wasn’t sure what exactly that would be.
“It’s something of a cliché that someone in the hedge fund and prop trading space suddenly wants to get involved with charities, but that’s what I tried for a while,” he says. “However, it was a frustrating experience. Not only are you throwing away the skills you have, but there aren’t many opportunities that tap into the experience and skills of a bond trader, so you’re not overly valuable to the charities.”
In 2012, he founded Social and Sustainable Capital (SASC), an asset management and private equity company that makes loans and equity investments of between £250k-£1m to community-based organisations that aim to improve the lives of local people by creating jobs and developing the local economy. The Social Investment Business and the UK government’s Big Society Capital have committed £10m to SASC’s new fund, the Community Investment Fund, which will focus on firms offering healthcare, education, training and employment support.
Rick co-founded SASC with Adam Knight, formerly a managing director at Goldman Sachs and global head of commodities at Credit Suisse. “We used to get into conversations when we were dropping our kids off at school about how we could move out of investment banking and re-evaluate our lives. We didn’t immediately think of moving into microfinance and social investment, it was something that we stumbled into and that uses the skills we gained in the financial sector.”
He admits that years in prop trading gave him the financial cushion to be able to pursue something he really wanted to do and, despite the new venture being connected to financial sector, he’s not doing it for the earning potential. “We’re not doing it for monetary gain, and neither are the other people who have joined from the banking sector. We pay a fair wage to people for doing something that makes a difference.”
There are opportunities for financial professionals in social and sustainable investment. Big Society Capital has been building its team over the past two years, had 25 investment professionals at the end of 2012 and is currently hiring.
SASC has just seven staff in its office in Kings Cross, London including Steve Morris as director of investments, who came from RBS’s corporate banking team. It has plans to expand and expects to bring in private equity and venture capital expertise in the near future.
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