Morning Coffee: The sorry story of Anna in London, a 24-year-old earning £150k. Ex-Goldman Sachs partner upsets new employees

Spare a thought for Anna in London; she is 24. Spare a thought for Steve in London; he is 25. Anna is a lawyer; she will soon earn over £150k ($198k). The Financial Times says she is "disheartened." Steve is a consultant; he recently left university with a first class degree and is earning nearly £50k. Steve is "disillusioned."

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Anna and Steve are part of a group of young people in the UK, whom the FT says worked hard and want to save money for a house deposit and their futures, but who can't. “It’s really hard to start building significant savings, let alone enough of a financial base to feel comfortable investing as the chancellor wants us to do," says Anna. “It’s those of us who won’t inherit a load that they’ve chosen to go after,” reflects Steve.

The Reddit group for UK HENRYs (High Earners not Rich Yet) is full of people like them. Some are deciding they can't be HENRYs any more because they're unable to save enough to accumulate wealth. Others are deciding that £50k is the new optimum income: "£125k guy nets £15k more than you after therapy, divorce lawyer, and blood pressure meds. He has a Porsche and clinical depression. You have Fridays and serotonin," observes one.

High earning Annas in London who want to save for house deposits are being hit by marginal income tax rates as high as 62% between £100k and £125k. When 9% student loan repayments are added in, the marginal tax rate increases to 71%. When 6% extra repayments for Master’s degrees are added in again, the marginal tax rate above £100k increases to 77%. A British student who studied a Masters in Finance degree and a first degree in the UK, and whose pay goes from £100k to £110k in a banking job, will therefore only receive £2.3k of the extra £10k. Once the same student has a family, they'll be clobbered by childcare charges; UK childcare is subsidized for everyone earning £99k and below.

London HENRYs are therefore complaining and threatening to move. One vice president at Morgan Stanley tells us such talk is now standard at banks in London: "I'm thinking of moving to Asia or the Middle East. Or to Europe, where I can get expat tax benefits." Most people working in London banking aren't British anyway, he observes: "They're only 10-20% of the total." At the very least, it might mean it's easier to get a banking job in London in the future. 

Separately, things are not going well for Stefan Bollinger, the ex-Goldman Sachs partner who's now running Julius Baer in Switzerland. 

Bloomberg reports that employees at Julius Baer have disclosed their "low morale" in a staff survey and that Bollinger is being quizzed about their lack of enthusiasm.

The disgruntlement comes despite Bollinger's frenzied travel between offices, delivering pep talks. It also follows his invitation for his people to "speak up" if they didn't agree with things (resulting in over 1,000 emails), followed by a round of job cuts, and allegations that he's been firing people who don't agree with him.    

Meanwhile...

Nick Storonsky of Revolut has homes in Dubai, Barcelona, Brazil and America and lives between them all. Storonsky manages Revolut from the UK. He manages his family office from Dubai. Revolut is waiting for a banking licence in the UK, and UK regulators thought he lived in London. (Financial Times) 

Only a third to a half of directors in banks make MD in any given year. The advantage of the promotion is "the ability to say no without giving a long justification, the freedom to leave the office for a long lunch or a school play, and the authority to schedule calls around your own calendar instead of someone else’s." (FT)

Starting salaries for consultants have stagnated, in some cases, since 2022. McKinsey, Bain and BCG are paying first year packages of $135k-$140k to first years in the US. (Financial Times) 

Calpers has moved to coinvesting alongside private equity groups, so that it pays lower fees. Its private equity portfolio has doubled since 2022, from $50bn to $103bn, and it now has investments across about 400 funds. (Financial Times) 

Jane Street quietly moved $500m into a newly-incorporated UK holding company called JSCT International Holdings Ltd.  (Financial News) 

Jane Street has got a new coding challenge. Winners will get a T-shirt and some other Jane Street stuff. (Jane Street) 

The Bank of England says hedge fund net repo borrowing was £77bn ($102 billion) as of early June, its highest level since data began in 2016. A “small number” of unnamed funds account for 90% of this. (Bloomberg) 

Accenture built a trial version of its internal human resources website in which staff are called “reinventors” rather than “workers”. (FT) 

Cliff Asness of hedge fund AQR says: "Prestige corporations need to broaden their recruiting beyond the grade-inflated radical factories that used to be our most esteemed universities." (Commentary) 

A Goldman partner advocates competitive gymnastics: "The moment I stepped foot on that trading floor, the same competitive juices that I had in gymnastics came out in something else." (Business Insider)  

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