Morning Coffee: How Goldman Sachs and JPMorgan keep their people happy. The worst employment contracts in financial services?
Which banks have the happiest people in 2019? Financial News reports upon a research team at UBS which has been 'analyzing' the ratings current and former employees have given to various banks on Glassdoor. Their findings suggest there are two inordinately happy places in the industry: Goldman Sachs and JPMorgan.
On average, UBS's researchers say employees at Goldman and JPM give their employers 78% satisfaction rates. The two jolliest U.S. banks are followed by Barclays and Bank of America Merrill Lynch (76% each), Morgan Stanley (74%), Citi (72%), Deutsche and SocGen (71%) and BNP Paribas (70%).
What makes Goldman and JPMorgan so (comparatively) serene? Goldman also ranks top for senior management approval and for compensation and benefits. JPMorgan ranks third in either category, behind Morgan Stanley and Bank of America respectively. By comparison, the French banks - BNP Paribas and Socgen - which rank towards the bottom overall, also rank badly for pay and senior staff.
If you want to keep people happy in banking, it therefore seems you have to inspire them and to pay them well. Goldman and JPMorgan seem good at this. It helps too that people at both banks seem to love working with each other."Smart people, even better money" is a typical compliment at GS; "People are incredibly smart, friendly, collaborative," is one of a similar genre at JPMorgan.
Naturally, a 78% approval rating doesn't imply universal drinking of the Kool-Aid. A quick perusal of recent Glassdoor reviews for each company suggests a pattern to employees' criticisms as well to their compliments. At Goldman Sachs, for example, there are plenty of complaints about working hours, office politics and increased cost cutting and competitiveness following the disappearance of "Uncle Lloyd." At JPMorgan in New York complaints seem skewed towards bureaucracy and the fact that pay isn't actually as elevated as might be expected...
Separately, however happy (or not) people are in investment banks, they might be happier than people at quantitative hedge fund D.E. Shaw right now.
Business Insider reports that there's some upset at D.E. Shaw following the unveiling of a new non-compete agreement for investment staff in June. People are being asked to sign the new contracts by mid-September and are hesitating before doing so.
The problem is that although D.E. Shaw's non-competes range from three months to a year (and are therefore shorter than those at the likes of Citadel, where an obligatory two years out of the market is common), they come with punitive restrictions to access to deferred stock. At most funds, once the non-compete period is over, it's possible to collect any deferred stock on the normal vesting schedule and to get a new job elsewhere. Under D.E. Shaw's new contract, however, access to unvested stock is removed as soon as a new job is taken.
Given that a high proportion of D.E Shaw's bonuses are paid in vested stock and that this stock vests over a three year period, this effectively means that D.E. Shaw's non-competes last a full three years. "It used to be that [D.E. Shaw] they kept your money, and that was your incentive to not leave, while other firms kept your time," one source inside the firm told BI. "Now they keep your money and your time."
D.E. Shaw employees don't have to sign the new contracts. If they don't, they can leave in September, avoid the non-compete period and keep their stock on its three year vesting schedule if they join competitors. Watch this space.
UBS and HSBC are developing systems that might cut the need for bond salespeople. UBS's machine learning algorithm, which shows salespeople the most likely counterparty for buying or selling a bond reduced the average number of calls a salesperson needs to make from five to three. HSBC is developing a bot that will send asset managers suggestions for bond transactions tailored to their existing trading patterns. (Bloomberg)
More than $4bn has been pulled from UK equity funds since Theresa May announced her decision to step down as Britain’s prime minister. (Financial Times)
JPMorgan sent a memo to its employees in the U.K. last week asking them to check their immigration status. (Bloomberg)
Sergio Ermotti indicated that are three candidates to replace him at UBS. They're thought to be Sabine Keller-Busse, Iqbal Khan (who only just joined from Credit Suisse) and Tom Naratil. Khan and Naratil are joint heads of wealth management, which could be awkward. (FiNews)
The British Labour party is thinking of mandating the public naming of all workers on over £150,000. (Financial Times)
Activist investor Oasis Management has taken a position in Sherborne Investors, the activist vehicle owned by Edward Bramson whose sole investment is in Barclays. Sherborne's shares are trading at a 23% discount, so it's thought to be a cheap way of gaining exposure to Barclays. (The Times)
How to retire young (in theory): Save up to 70% of your annual income until you have 30 years’ worth of living expenses. Invest it in low-cost tracker funds and withdraw no more than 4% every year. (Financial Times)
Former hedge fund manager Hugh Hendry is becoming a property developer and starting a $50m property fund on the Caribbean island of St. Barts. (Bloomberg)
JPMorgan Private Bank is discouraging customers from using public wifi in airports after a family office client was tricked into transferring $250k (£205k) to a fraudulent account. The perpetrator was able to impersonate them and authorise the transfer after accessing a social media profile saying, “headed to Paris with the family! See ya in two weeks!” (The Times)
Ex-HSBC CEO Douglas Flint has been seen at the Sani Resort in Halkidiki, northern Greece. (The Times)
If you want to become very rich you should study at Harvard University. (VisualCapitalist)
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