Morning Coffee: Never leave banking at 24 to follow your dream. Goodbye Garth Ritchie?
The problem with being your own boss, as a wise person once said, is that there’s no human resources department to complain to when your boss starts mistreating you. And in the same way, the main disadvantage of having no set working hours and no limited holiday allowance is that you have no set non-working hours, and no holiday allowance at all. Nevertheless, according to surveys from a trade association, there’s been a 66 per cent increase in the number of 26 to 29 year olds choosing a freelance career in the last decade.
Fools. As various 20-somethings interviewed by the Sunday Times have discovered, being a freelancer in your twenties is incredibly stressful. And this isn’t the kind of “oh gawd, I’m sooo stressed” stress that you hear about from your pals in Financial Institutions Group over networking drinks. When freelancers pull all-nighters, nobody brings them free pizza. There are no at-desk massages, no on-site dry cleaners and no fruit bowls. They even (and this may seem literally unbelievable to readers in investment banking, but we have researched it and verified it is true) have to buy their own coffee. And there’s no next door office to wander down to for a chat, no senior mentor to ask for advice and nobody to phone when the IT stops working.
Not only that, but there’s no salary system. Rather than getting a large payslip eleven months of the year and then a really big payslip in January, people in the gig economy have to do some work first, then send an invoice. Then they have to check whether the invoice got paid or not, and if it didn’t chase it up. And then chase it up again, all the while in the knowledge that their own bills usually have to be paid on the dot. If you’re not on the ball, you could let large sums of money slip through the cracks and while in principle it’s possible to charge interest on late payment, in practice few people ever have the brass neck to say this to a client. Sometimes, you even have to do “test work” for free. - “Of 100 applicants, 99 people are doing work they won’t get paid for,” the head of a freelance support network tells the Times.
Whilst giving up your nice safe analyst or associate job in an investment bank to start a company matching dogs to owners or to become a freelancer designer or Instagram influencer might be quite the zeitgeist, there are therefore plenty of reasons not to do it.
The gig workers unearthed by the Times tell tales of 13 hour days, mental and physical illness and the relentlessness of working all weekend in airless basements. One young woman collapsed and ended up paying £30 a day for hospital internet in order to keep up with work emails. One young man had to take some work in the local shop to supplement his income. The dream life it is not: it's all about chasing more work, partly in the hope that some cash will come in at the right time and partly out of fear that if they turn anything down, the offers will dry up.
Your twenties are the very worst possible period in your life to be trying a freelance career; you’re trying to build your franchise, master your trade and learn how to fill in a tax return, all at once. If you want to be a digital nomad, checking in from a hipster cafe with your laptop to pick up some skilled work in today’s gig economy, for God’s sake do it when you’ve got a reputation, a list of contacts built up over a couple of decades and preferably a house that’s been mostly paid for. That way you might be able to enjoy the lifestyle. So maybe stay in banking for a while and make the most of the 'protected weekends.'
Separately, in not exactly related news, Garth Ritchie, head of investment banking at Deutsche Bank, might be finding that this phase of his career is coming to an end (this is unconfirmed at time of writing, but several seemingly well sourced reports say it’s likely). Depending on who you ask, he’s either being made to take responsibility for the investment banking division’s sustained underperformance, or he’s resigning rather than implement the proposed “Plan B” cuts to the division. In either case, it is hard to see this as a good news story for employment at Deutsche, with the US operations and the global equities business the highest risk areas to be in.
Ironically, one of the things that might at least slow down the pace of the cuts is the simple fact that Deutsche is not exactly in a position to raise capital at the moment, and that the scale of the potential job losses rumoured would require a substantial restructuring provision to be made. As well as the redundancy expense, substantial trading portfolios would need to be sold, most likely at a loss, office leases terminated and software development costs written off. It’s an expensive business trying to save money.
Meanwhile …
It’s not as crazy as it sounds – plenty of senior bankers have a vineyard somewhere in France or Spain and try to sell their full-bodied tannic reds to the public. But a luxury chocolate brand, like the one that Gary Parr of Apollo Global Management runs “because I don’t play golf” is quite a novel twist on the same idea. You don’t have to wear a hairnet to visit your vineyard though. (Bloomberg)
Once upon a time Bradley Birkenfeld helped UBS to help rich Americans avoid tax. Then he went to jail for this. Then he got $104m from a whistleblower program for informing on his employer. During this whole process, UBS said some mean things about him, particularly that his autobiography was an “unsubstantiated recollection” and that Mr Birkenfeld “had been convicted of having lied”. This week, a court ruled that these mean things were substantially true, and so he was unable to take UBS for another $20m in a lawsuit. (Reuters)
Is the solution for Deutsche’s technology problems to just tear the whole thing up and start again? (FT)
The most annoying phrases in private banking jargon – “holistic advice”, apparently, can mean “making sure that the secret lover gets looked after in the client’s will, without the family finding out while he’s alive”. (Finews)
AustralianSuper (as in superannuation although it is no doubt a super fund) plans to open up New York and London offices to manage its $108bn of pension fund assets, hiring as many as 70 professionals to do so (Bloomberg)
More unwelcome publicity for Revolut, as it leads the fintech league table of “complaints to the Financial Ombudsman” (FT)
And there’s no business like show business, but boutique investment bank Barron International Group comes close – they’re the specialists in arranging deals for Broadway shows. (Variety)
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