Morning Coffee: Harsh life lessons for laid-off bankers. And JP Morgan’s nepotism scheme had a cutesy name

It’s important not to get institutionalised

It’s not the kind of place that you ever want to end up in, but it might be the kind of place that you need to be at some time.  The offices of LHH Penna look like they’re a bank, are located among all the banks and are full of bankers.  They are, however, a specialist outplacement company, with desks and computers for people to work on their job applications, and coaches and counsellors to help them come to terms with the fact that they’ve been released into a relatively sickly labour market.

The first step for a lot of bankers seems to be to realise that they need any help at all.  It’s possible to build a really strong career and franchise in the investment banking industry without ever realising that you’re entirely dependent on the brand of your employer, or that you’re an expert in a very specific niche where there are fewer than a couple of dozen jobs, all of which are occupied.  Some of the hardest luck stories from the outplacement industry are of team leaders who get caught in a downsizing and suddenly realise that the only vacancies for which their decades of experience are remotely relevant are for vastly more junior roles.

And it’s not just in career terms that people find that they have become institutionalised.  One client of the outplacement firm realised that he wasn’t able to tell his grandparents that he’d been laid off, because he didn’t have their phone number – all his contact details were on his work phone that he’d had to give back.  When a third of the guests at your wedding are colleagues or clients, being made redundant is as much of a personal crisis as a professional one.  If you have, as one guy also had, joined a bulge bracket firm on the graduate training scheme then spent fourteen years there, you can end up in a situation where you’re starting at a blank screen for two days then calling up one of LHH Penna’s coaches to literally tell you how to write a resume.

It’s no wonder that the outplacement firms say that demand for mental health supportive services has increased very sharply over the last two years.  But the good news is that once people get over the trauma, many of them get to a significantly more healthy place than they were before the redundancy.  Kids get seen, relationships mended, and the good thing about investment banks is that they tend to be generous payers of redundancy settlements, particularly to “good leavers” with a lot of money tied up in deferred compensation plans.  That gives something of a financial cushion, and the career coaches’ advice is to make use of it and take time to think about your life, rather than jumping at the first opportunity that comes up in the same industry.

Separately, one recently redundant senior banker who definitely won’t be rushing back into the industry is Timothy Fletcher, formerly the MD responsible for JP Morgan Asia-Pacific’s special HR program to offer jobs and internships to the relatives of corporate clients and government officials.  He’s been permanently barred by the Fed for violating US antibribery law. The program was known internally as “Sons and Daughters”, following the pattern of many recent banking scandals from “The Cartel” to “Old Gits”of giving your questionable activity a bantersome name that sounds really bad when read out in court.

The Sons and Daughters programme delivered the goods, apparently; the DoJ settlement credits it with “profits of at least $35m as a result of the corrupt scheme”.  Since the financial penalty associated with the settlement was $72m, though (for this case alone; JPM has paid over a quarter of a billion dollars to settle similar issues over the last five years), the long term return on investment wasn’t so good.  The psychic cost to the colleagues of the Sons and Daughters might also have been quite high – in one related settlement at another bank, managers were reduced to begging a similar hire to “answer the phone more and try not to be rude”.  There’s got to be a better way to generate business.

Meanwhile ...

The CFA Institute has paid $321,000 to the US Department of Justice to settle an “anti-discrimination” case.  Apparently the Institute chose to prefer hiring CFAs who were H1-B visa holders for some positions grading its notoriously difficult and painful exams.  The idea was to “reflect the diversity of the test takers in order to ensure fairness”, but the DoJ said that they discriminated against American citizens.  Going forward, the scripts will be marked by unpaid “volunteers”.  (FT)

The MiFID2 research rules are widely regarded in the industry as a disaster, but that’s not how the regulator sees them – according to Andrew Bailey, British investors are paying £180m a year less for research, which he describes as “nearly £1bn over five years”, a feat of rounding-up that might not pass many sell-side compliance teams. (Financial News)

After the change in control of Congress, it appears that Democratic legislators are ready to use subpoena powers to ask Deutsche Bank questions about a) its relationship with Donald Trump, b) its relationship with the government of Russia and c) the relationship between a) and b). (Vanity Fair)

Thundering Herd no more? Bank of America plans to drop “Merrill Lynch” branding from trading and investment banking, and to rebrand wealth management as “Merrill” without the “Lynch”. (Wall Street Journal)

The UK and USA have struck a deal to stop derivatives contracts from falling apart as a result of Brexit (FT)

And Morgan Stanley has hired one of its external Brexit advisors into a new “Data Center of Excellence” MD role (Reuters)

We knew that 2018 was a much better year for US banks than European competitors, but now that the market share figures are finally in we can see how badly the non-US banks have fared. (Bloomberg)

Studying the email and other connections of MBA students reveals that it’s really important for female executives to be part of a close network of other women, irrespective of any other networks they have. (Harvard Business Review)

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