Why finance professionals can't afford their children
Deep in Cobham, a leafy Surrey town within commuting distance of London, Samantha, the American wife of a City finance professional is weighing how best to bring up her son. "He started out in the Montessori and now he's in the local prep school," she says. "It's a good school with a nice people - there are a lot of Chelsea mums around here. And, my goodness - there are so many activities. It's almost like he's at a mini-university."
Samantha's son, now aged five, attended a drama group when he was 18 months old. He went to baby sign language classes, baby massage classes and infant street dance classes. There's pressure for him to start playing cricket and to join the local tennis club. "Sport seems very important to British people," Samantha says. "The women here are telling me that he needs to go the tennis club for social reasons and that he ought to play cricket because it's an upper class sport. I've also been advised to get him into football so that he has friends in the playground."
Samantha says she's not typical of the parents in the Surrey banking set. Firstly, she doesn't work (plenty of banking spouses do). Secondly, she has neither nanny nor an au pair. Thirdly, her husband's not yet a managing director and earns less than £200k. "He's not in one of those roles where you get promoted young. We're not really part of that 1%," she reflects. "But a lot of people around here are."
For already overworked and overburdened financial services professionals, the cost of raising a modern privileged child can be overwhelming. As NottingHillMummy, a blogger and wife of a trader at an unnamed U.S. bank wrote in the Times recently, some bankers on £500k are opting to only have one child - more than that are unaffordable,
"Most people have nannies," says Amanda, an ex-head of equity sales at one U.S. bank in London. "It's impossible not to - you start work before they wake up and come back when they're asleep. You're also travelling two weekends out of every four." Filipino nannies are popular with female bankers, she adds. "They're more willing to do the housework than the average British nanny, and are good when the children are very young." Nannies can cost 'as little' as £20k a year, but Felicity Sanford at Buttons Nanny Agency in West London, says banking families are more likely to pay £40k. "They often need the nanny to put in extra hours."
The nanny-cost, however, is just the start. There are the extravagant birthday parties - Turney Duff, an ex-Morgan Stanley salesman and hedge fund trader says he spent $20k on his daughter's first party. There are the annual ski creches run by companies like Powder Byrne (cost £495 per child per week). For the West London finance set, there's the pressure to put your child on the waiting list for Rolfe's Montessori School and Nursery - deposit £1k, with annual fees of £13k. There are 'Mini Mozart' sessions for toddlers. There are 'Petit Pierrot French lessons' for children from eight months old. There are contemporary dance classes for similar age groups. And - most importantly, there's Purple Dragon children's club in Chelsea, cost per child £4.2k a year (or £1.8k if you only want the after school membership).
"I went to Purple Dragon a few times," says Amanda. "But I didn't really like it. It's basically a crazy expensive elite activity club for children and you can't even leave your child there while you work. You have to stay with them. It's full of Filipino nannies drinking lattes." Purple Dragon clearly appeals to some people, however, NottingHillMummy said she has a friend who's spent more than £100k on membership fees.
"It's incredibly costly raising a child and living here," laments Samantha in Surrey. "Everyone in our neighbourhood seems to have a lot of help. No one has 'staff', but they have nannies and people coming in all the time, cleaning, gardening, washing their windows - I mean who has someone to wash their windows? You just don't get that in the U.S."
Nonetheless, not all finance professionals are restricting themselves to investing in a single expensive prodigy. For those who can afford it, plentiful offspring are a badge of success. Karen Cook, president of Goldman Sachs Europe since 2004, has six children. Nicola Horlick famously has five. Katherine Garrett-Cox has four. But Amanda cautions that there can be an invidious reason for multiple pregnancies. "Some people just do it for the maternity leave. - You're working so hard and it's like 'Gosh, wouldn't it just be nice to have a break?'
The cheaper child-rearing option
Not all financial services professionals fall into the high-spending parenting trap. Erika Shapiro, a yoga teacher and former saleswoman at Citigroup, Goldman Sachs and Credit Suisse, worked in banking while she was a single mother of two young children.
"I had au pairs rather than a nanny. They worked fewer hours, but we made it work," Shapiro says. "It was cheaper and the children did not go to expensive after school clubs - they went to the local leisure centres" Even though her au pair only worked 20 hours a week, Shapiro says she was able to fit in working around raising children. "Was it hard? - Yes. Was I as present as a stay at home mother? Probably not, but one makes choices."
Amanda says quite a few people now are opting for au pairs in the banking set. "Au pairs are so much cheaper when your children are at school."
Mandy Lehto, a former director in fixed income trading at Dresdner, who's since become a personal coach, says she used the cheaper option of a child minder after her first marriage ended in divorce. "It was extremely difficult. I was working very long hours at the time, trying to please clients and trading, and when I went to go and pick my son up from the child minder he was calling her mummy and telling me he didn't want to come home with me."
When she had her second child, Lehto opted not to go back into banking after maternity leave was over. "It gave me the head space to think. I realized how much I'd missed with first child and as a middle-aged mother, I wanted to do what I wanted - not what I could." Lehto says she avoids putting her children into too many after school clubs and activities. "I don't want to be judgmental and it's up to parents how they raise their children, but there children in my son and daughter's schools whose schedule is as busy as mine when I was in banking. - I am very mindful that I want to avoid that."