Morning Coffee: 29 year-old retiring on $44m has a message for young bankers. Trader in trouble for allegedly deleting Whatsapp messages
If you're an analyst in a U.S. investment bank you probably received your bonus sometime last month. If possible, you should now avoid spending it - you are in an industry that has a reputation for short careers marked by gruelling intensity.
The same can be said of American football, where you're one of the lucky ones if your career lasts a decade. And as with bankers, some footballers are caught out by mandatory retirement.
Pay for top young footballers is higher than for top young bankers. In an investment banking division (IBD), combined salaries and bonuses for first year analysts in London are around £88k ($108k), rising to £125k ($153k) over three years. In the National Football League (NFL), first year guaranteed salaries are already $285k. If you're good at football you can quickly earn $25m+ a year; the same doesn't apply to Excel and pitchbooks.
The New York Times looks at the case of Andrew Luck, the 29 year-old who was the star quarterback for the Indianapolis Colts, and who retired unexpectedly last month. It was said at the time that he'd Luck quit because his body couldn't do it any more - he'd suffered torn cartilage in two ribs, a torn abdomen, a lacerated kidney, a concussion, and a torn labrum. “It’s been unceasing, unrelenting...and I felt stuck in it," said Luck. "....I haven’t been able to live the life I want to live.”
However, Luck also quit because he could financially. Aged 29, he had already earned $97.1m, and after paying his agent and taxes he likely had $44m left. Luck had not been a spender. When he stopped enjoying football, when his body stopped being able to withstand the assault, he quit - and left $58m in the final two years of his contract on the table.
The NYT notes that not everyone has this choice. There are cases of young athletes burning through $100m and going bankrupt two years after retiring. If you want to get out you need to spend carefully, and you need to have a plan. People like Luck have been saving 'since day one.'
Banking isn't football. You're not going to save $100m in 10 years and you're not going to tear your abdomen in the course of your job. But you could save $500k+ and you may suffer the sorts of adverse health consequences detailed by former Goldman Sachs associate-turned academic Alexandra Michel, whose description of the 'banking body-abuse cycle' found juniors losing hair and developing nervous tics through exhaustion. Like footballers, therefore, you want to ensure you have choices. If, like Luck, you want the choice to leave voluntarily you need to think ahead. Live on your salary; save and invest your bonus.
Separately, there's been another alleged Whatsapp incident with unfortunate consequences. The Financial Times reports that Konstantin Vishnyak, a 41 year-old who traded loans for eight years at VTB Capital in London, stands accused of deleting Whatsapp messages that the UK Financial Conduct Authority says were relevant to an insider trading investigation. Vishnyak denies this, but the FCA is pursuing him in court and if it's successful Vishnyak could be jailed for up to two years for removing the messages. The case follows recent claims that the dismissal of Tim Howarth, head of financial services consulting at KPMG, related to Whatsapp messages he sent to colleagues.
Think before you send messages. And before you delete them.
25 year-old Lizzie Durack quit as a Chelsea goalkeeper this summer to work in Goldman Sachs' London prime brokerage division. (BBC)
Deutsche Bank is letting go of people in high yield, distressed and investment-grade debt teams even though head of debt trading Ram Nayak said there wouldn't be any layoffs. The Latin American credit business is being eliminated entirely. (Bloomberg)
Everyone wants to work for Revolut, which is hiring around 120 to 150 people a month. (Financial News)
Credit Suisse is hiring three healthcare bankers. (Reuters)
Life at UK wealth manager St. James's Place is a hard-sell with high pay and big perks for advisors who bring in money. "At the peak of my earnings, I was making £250k a year — and that was before bonuses. I looked after about £70m for around 700 clients." (Sunday Times)
Liquidnet's CEO says trading businesses are suffering. "Before the financial crisis, anywhere that you looked inside of investment banks, or inside of asset management, it was just, you know, high margin, high profit. That’s just not the case today. Both sides of the fence are under severe margin compression.” (Financial News)
Have a confidential story, tip, or comment you’d like to share? Contact: firstname.lastname@example.org in the first instance. Whatsapp/Signal/Telegram also available.
Bear with us if you leave a comment at the bottom of this article: all our comments are moderated by human beings. Sometimes these humans might be asleep, or away from their desks, so it may take a while for your comment to appear. Eventually it will – unless it’s offensive or libelous (in which case it won’t.)