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Why so many juniors leave investment banks after two years

In around two months time, this year's interns will arrive at investment banks. Having seen plenty of intern cycles during my banking career, I can predict pretty exactly what the coming intern class will be like: they will be keen. They'll turn up,  find their managers on LinkedIn and post all sorts of enthusiastic things about their experience, accompanied by hashtags like #banking, #wallstreet, #wolfofwallstreet, #finance and so on.

Twenty four months later, everything will have changed. Those shiny-faced interns flushed with the success off getting a full time offer will have the hue of dishwater and the ragged appearance of sailors on a long voyage that has not been smooth.

I know. I've seen it often.

It used to be that junior bankers in the U.S. especially left after two years to do an MBA. This has become less common since Goldman ended its two year analyst program and let juniors stay on indefinitely in 2012. Even so, my observations from working at U.S. bank (not Goldman) is that a lot of people leave after around two years anyway.

Why? The simple reason is that the job they're doing is not the job they were expecting. It's a case of bait and switch: you're lured with the promise of one thing; you get another.

Banking is an industry where, as a junior, you have to suck-up to get ahead. If you join the trading floor, you'll be expected to do menial tasks like the breakfast round, or delivering lunches to clients. If you're in corporate finance, you'll need to show your dedication by being first in and last out. If you thought you were going into the front office, you may find yourself in a support function, particularly if you get on the wrong side of the person deciding which role to place you in.

Then there's the technology. Banks spend billions on technology, but this does't mean they're advanced. A lot of banks are still running software that other industries haven't used for years and juniors are aghast. They come expecting something special and they're effectively handed rotary phones.

It takes a while for the veneer to run thin, but as juniors wake up to the idea that the role isn't what they expected, they start to panic. Sales and trading jobs in the securities division of an investment bank are not good preparation for careers in other industries; stay too long and you can get stuck. As this realization takes hold, juniors start looking furtively at managers in the hope of getting some frank advice. If they think you're receptive, they'll share their concerns about the future: mostly they want to leave and do something totally different.

What can that be? If you're in corporate finance, there's always private equity, but getting in is almost impossible and PE jobs increasingly involve the same sort of spreadsheet jockeying that goes on in banks. There's fintech, but the pay is bad and the future murky. There's consulting. Or there's the rest. I've seen people open restaurants and fast food businesses. I've also seen richer juniors with parental backing travel the world, come back and do a Masters and then go back into banking once some of their idealism has disappeared.

For banks, though, it's an issue. A lot of money is spent recruiting and training these young people and two years' work is not a good return on that investment. Banks need them juniors to stay. Collectively, young people are in a strong position to effect change and demand more interesting work and shorter hours. If a large proportion leave after two years though, change will never happen: banks just recruit a new cohort of graduates and the process starts again - as will be the case when the 2018 interns arrive in June.

Sam Birkhead is the pseudonym of a VP at a U.S. investment bank.

Have a confidential story, tip, or comment you’d like to share? Contact: sbutcher@efinancialcareers.com

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AUTHORSam Birkhead Insider Comment
  • Wi
    Wilbur
    4 September 2018

    They think they know it all
    then they get slam dunked with reality
    many go back to college
    some end up cleaning restrooms in starbucks
    The problem is they are not taught reality in business schools
    you can study the "theory of business" inside out and in 10 different languages
    still wont make you a good businessman.

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