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Morning Coffee: The only way you’ll get a pay rise this year. “Don’t bother” joining a hedge fund

Let’s not get carried away. Yes, investment banks have managed to make money in their FICC businesses in the third quarter. Yes, there are some mega-deals that have suddenly resulted in huge pay-days for investment banks. But…

Investment banks haven’t lift the hiring freeze after Q3, according to Financial News – James Gorman is happy that Morgan Stanley increased revenue 25% less people – and if you look further back than the past three months pay is down at most U.S. firms.

Call it Brexit arbitrage, but there are select group of banking employees in London who have reason to cheer the sterling slump. Most U.S. investment banks pay their bonuses in dollars, but base salaries are still paid in pounds.

But, there are exceptions. The FT reports that “hundreds” of the 6,000 Goldman Sachs staff in London are paid in dollars and “some” of Morgan Stanley’s UK employees are receive their salaries in foreign currency. Small mercies.

Separately, a hedge fund manager who earned enough money to retire at 36 has some advice for traders and graduates clamouring to get into the buy-side – “don’t bother”.

Raoul Pal managed GLG’s global macro fund and retired in 2004. He tells Business Insider that he’s constantly receiving requests for advice on getting into hedge funds, but believes the industry is now “miserable”. “People are fed up,” he says.

"They work really hard hours, the stress is ludicrous, the amount of assets you are able to raise is not easy any more," he says.

If this advice appears a little facile coming from someone enjoying their retirement before they even hit a midlife crisis, Pal says it’s not that the industry is inherently bad, but that it’s been forced into mediocrity.

"When I left [the industry] it was at that moment that the hedge fund industry started switching to taking pension-fund money, and the pensions wanted it to look like a bond,” he says.


After a spate of huge deals, J.P. Morgan and Morgan Stanley are topping the fee league tables (WSJ)

Goldman Sachs missed out (CNN)

Brexit bluster: 10,000 banking jobs moving out of London seems like a more realistic figure (Politico)

Mark Schwartz, the former head of Asia-Pacific at Goldman Sachs, has joined the board of Indian ecommerce firm Paytm (Financial Times)

London’s Big Bang: “Hours became longer, lunches shorter and pay rose. The business became more aggressive and less clubby” (Reuters)

Fleece vests, or gilets, the uniform of Silicon Valley and hedge fund traders (Business Insider)

65% of fund managers have no intention to move out of London (Financial News)

Citigroup has cut enough staff in London that it can lease out some of its Canary Wharf HQ to tax collectors (Gadfly)

A reminder of Rurik Jutting’s email sign off: “I am out of the office. Indefinitely. For urgent inquiries, or indeed any inquiries, please contact someone who is not an insane psychopath.” (Guardian)

AUTHORPaul Clarke

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