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Morning Coffee: Traders may no longer need nannies who start at 5am, and the 21 year olds getting every investment banking associate’s dream job

End of the 5.30am commute

There are good and bad things about the life of a trader, but by common agreement, one of the most horrific aspects of the job is the long hours, and particularly the early starts.  Even on a bright sunny day with the birds singing in the trees and the market going up, it’s no joke getting up when the rest of the civilised world is sleeping; on a cold and rainy January morning the week after a disappointing bonus, the amount of willpower required to head for the early train rather than straight back under the covers is practically superhuman.  Belatedly, the market and trade associations are finally beginning to ask the question -  is it really worth it?

In London, trading hours run from 8am to 4.30pm  In New York, they run from a far more civilized 9.30am to 4pm. From a market point of view, the length of the London trading day has always been of questionable value.  The lion’s share of activity is always in the first and last hour, and that’s become even more emphatically the case with the rise of the algorithms.  But there are even more fundamental economic reasons why the current trading day might not be sustainable.  They relate to the fact that, as former equity sales director April Day points out to Financial News, a twelve hour working day isn’t really compatible with the human right to a normal family life. 

The trouble is that if you need to be ready for a morning pre-market meeting at 6.30am and have a 30 minute commute (which may be optimistically short), then someone else needs to be taking care of your kids from 5am until you get home.  Realistically, this could be 12 hours later. This means that a trader with children needs either a spouse who has given up on high-flying career ambitions of his or her own, or a full time live-in nanny.  Once upon a time, traders in banks made so much money that one or the other of these solutions could be made to work (for a while), but when it stopped working it helps explain why it's notorious that divorce is the death of trading performance).

The problem combining a trading career with procreation has been noted by the Association for Financial Markets in Europe, which has suggested that shortening the trading day might help the industry address its gender imbalances. They might be right - although no one (woman or man) is particularly keen on signing up for a job where you don't see your children now. The real issue might be that trading roles now pay less, making it harder to justify living in a financial centre city as a one-income family, or paying for round the clock childcare that can cost well on the way to six figures out of post-tax income.  In future this might not matter: algorithms don’t have children, after all.

Elsewhere, potentially an almost as seismic change to the working culture of the banking side of the industry is the news that private equity fund KKR is going to be hiring a 2020 analyst class of final year university students.  KKR's overall intake will apparently be little changed, which implies that it's not going to be as easy to get a job there if you're done your two years as a junior investment banker.

Investment banks have always kind of hated the private equity industry’s habit of raiding their training programs for the most talented juniors, and have tried to put measures in place to stop second year analysts from being quite so blatant in interviewing for PE jobs.  But moving out of an investment banking division job and into private equity has long been recognised as part of the industry career structure.  Now that KKR and Blackstone are doing a bit more of their own dirty work, the investment banks can look forward to hanging on to more of their young stars, perhaps at the price of always wondering if their recruits are now made up of the people who couldn’t get private equity roles out of university.


Fans of “Goldman: The Movie” might be interested in this alternative profile of GS at 150, as the interviews with insiders (mainly from the London office) are tempered with views from Nassim Taleb, Frank Portnoy and other sceptics (Spears)

Jean Greene, the Lazard banker who delivered Anheuser/InBev, among other big deals, has joined the Industrials team at Bank of America, the latest in a series of big hitters to go there, underlining the fact that Matthew Koder appears to have both the ambition and the budget to break into the top tier (Business Insider)

Anthony Scaramucci gets another lesson in what a warm, caring and loyal place Wall Street is compared to the world of politics, as his former boss Donald Trump unleashed a volley of Twitter abuse (The Hill)

A man, a spreadsheet, an intimate knowledge of the credit card industry's reward programs and two weeks compliance-required leave – how analyst Lou Haverty managed to get the first-class holiday of a lifetime for only $5,000 (MarketWatch)

The Business Roundtable – a group of American great and good captain of industry types including Jamie Dimon – have issued a statement saying that they no longer regard shareholder returns as the only priority and they now think that employee welfare matters too (FT)

“Chartered Financial Analysts – the dream to excel”. Of course, those with the qualification know the FT really should have said “CFA Charter Holders”. And “the dream to Excel™” (FT)

Photo by Viktor Forgacs on Unsplash

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AUTHORDaniel Davies Insider Comment

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