Investment banks have a retention problem. Today's juniors are more restless and less tolerant than their predecessors. Many come for a few years and then move on to work for technology companies or private equity funds, or become entrepreneurs.
I worked in banking [at Goldman Sachs] for two years before leaving in June. This is why I think young people quit.
Millennials don’t have staying power
At the core, millennials nowadays do not have the same loyalty and commitment to one job that past generations had. There is a plethora of opportunities out there especially for junior talent. As an anecdote, many of my friends that work in technology and startups often switch jobs more frequently than I do.
Millennials can't hack the unsustainable banking lifestyle
Millennials aren’t willing to work 100+ hour weeks during the analyst years, followed by 80-90 hour weeks as an associate, followed by 70 hour weeks as a VP. Only when you're MD do the working hours drop to about 50-60 hours a week. However, as an MD, you are regularly traveling, which brings the time you're at work back up again. This corporate ladder can take 10+ years to climb, and many of those in Generation Y are asking themselves one question: Why?
Millennials are just doing what previous generations of junior bankers did
Oddly enough, not too long ago every investment bank had 2-year contracts with all their incoming analysts. Nowadays, investment banks have realized that the best associates - whom they used to hire out of MBA schools - are actually their current analysts, and that hiring and recruiting associates externally is more expensive than retaining the talent they've got.
In the circumstances, banks are doing their best to keep people onside with retention programmes to cut juniors' working hours. However, juniors are still leaving - in this sense, they're just doing what early stage bankers have always done!
Millennials in banking realize they're learning nothing
By no means do you learn everything about investment banking in two years, but after about two years, analysts typically reach a plateau in terms of their learning curve
For the first few weeks or months you are drinking from a fire hose, but then you get into a groove and the work feels repetitive and process-driven. This is when people leave.
Millennials in banking feel bad
Lastly, investment Banking is not a career that is publicly seen as “contributing” to society. When you're an investment banker you are not a doctor saving lives. Nor are you a teacher educating children. While bankers do provide a necessary service for many companies, the banking aura is definitely not a positive one. Goldman Sachs was famously referred to as a "Vampire Squid”, “jamming its blood funnel into anything that smells like money”. With a public image like that, how could any Millennial feel comfortable working in investment banking? Millennials nowadays look for a sense of purpose and contribution in their job. If they don't get it, they quit.
Alan Li was a former analyst in Goldman Sachs' San Francisco office. He now runs a blog and series of podcasts intended to bring transparency to the world of finance.