Morning coffee: The biggest victim of junior banker overwork. JP Morgan’s investment bank has been a fortress for at least five years

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After an extremely set of disappointing results for level I of the CFA® exams, it now turns out that level II has also seen its worst success rate for a decade. There have been a lot of theories advanced over the past two weeks on why things were going so badly this year, most of them related to technical issues with the mechanics of the test system. But what if it was much easier than that?

Regardless of the test, the biggest driver of performance is how well you are able to prepare. And it’s hard to find the time to study when you’re working 80 hours a week. Most years, investment banks (and the accounting firms, consultants, and other financial sector employers of a large number of CFA applicants) recognize this by granting individuals study leave. And most years, there are unhappy young people who have their education leave canceled in the short term because there is an agreement, and they are bitter about it. We even noticed a phenomenon of “CFA sabotageWhere some bad bosses systematically undermine their juniors because they don’t want them to get a qualification that tends to lead to promotions, job changes or usually not always there to do as you are told.

But in the first half of 2021, even good bosses were unlikely to make generous allowances – the financial advisory industry (and therefore all of its ancillary professional services) was operating beyond capacity limits, with a shortage of manpower. biggest banking story all year. People who achieve Level 2 and Level 3 qualifications tend to do so in exactly the types of jobs that have been under the most pressure.

Additionally, it has been common for eighteen months to complain that the remote working environment has made it extremely difficult for people to set limits on their hours and prevent the unholy trinity of Excel, PowerPoint, and Zoom. to spread throughout. day and night. It is reasonable to assume that this would also have made it more difficult to establish and stick to a review and study plan, even without the unusual workload. Under the circumstances, perhaps the surprise is that the success rate is as high as it was.

None of this is likely to be of great consolation for the unusual number of failed applicants, although hopefully it might help to understand that the same set of circumstances increased junior salaries and contributed to a market in which it is much easier to be hired, CFA or none. Which begs the question of whether it is worth going back to it. According to head hunters, qualification is not quite a must, but among the nice adornments to have in your CV, it is one of the most beautiful. So if you really can’t cope with it, you’re not doing yourself irreparable damage, but the best idea is probably to dust off your pride, bite the bullet, and memorize the Black-Scholes formula all over again.

Somewhere else, Jamie Dimon confirmed to Fox News that (health permitting, presumably) he intends to stay longer than the five-year term of his last incentive plan, but likely not for ten years. Good for workers or bad?

Almost certainly good news, in our opinion. JP Morgan is an integrated universal bank, and the biggest threat to investment banking jobs in this type of organization lies in the nerves of the C-Suite. Dimon knows the industry has cycles, sometimes it dishonours itself with massive losses, but is fundamentally profitable as long as you maintain the franchise and invest in market share.

Of course, nothing lasts forever, one day there will be a succession battle, and then people will have to worry about a new CEO come and worry about revenue volatility, capital consumption, reputational risk and all the other reasons CEOs submit business plans with downsizing to the front office. But to have JD in place for the next five plus years, with Dan Pinto apparently as the immediate fallback to a horrific event, it means JPM’s bankers have far fewer immediate worries than many other banks down the street.

Meanwhile

The law of reputational permanence is not easy to overcome – Ulf Ek has been trading carbon permits for over fifteen years, and has his own hedge fund, but in the profiles he will always be a “former Enron trader.” “. (Bloomberg)

HSBC confirms it is in the $ 100,000 club for junior bankers’ salaries. (Financial news)

Archegos Capital employees were required to keep part of their bonuses in a “mandatory deferred compensation plan”, invested alongside the rest of the portfolio until they left the company. They had been promised that the value of their contributions would not decrease, but obviously there is not necessarily any money left in the company to keep that promise. According to a former employee, Bill Hwang’s staff are “in a difficult position” and “deserve sympathy,” although they may not get much. (FT)

JP Morgan is recruiting elite athletes, including a judo champion and a diver who missed the Olympics due to injury. In their discussion of the merits of the program, they pretty much admit – not exactly in those words perhaps = that the main quality they look for is “unlimited tolerance for fatigue,” the key attribute of success as a as a junior banker. (Financial news)

Credit Suisse has hired Chris Johnson from Wells Fargo to replace Jason Vickery as head of trading program sales. Apparently, “his nickname on the street is Whopper”. It’s the kind of nickname that someone is usually very proud of and insists on being called, or absolutely hates and you should never say it to their face. New colleagues would do well to know which ones before he arrives – his LinkedIn gives no clue but apparently it dates back to high school basketball. (Business intern)

photo by C DX on Unsplash


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