Banking – the ultimate dead-end job

Banking – the ultimate dead-end job

Growing interference and lower pay are driving the smartest and most innovative people away from the once-superior banking industry in US

The transformation of banks from proprietary trading machines to pure service entities is not as straightforward as changing regulations.

Increasing interference and the desire of governments to control how and what bankers are paid mean banks may not need terribly smart people to run them. So who wants to work and lead a dumbed-down organisation? And are risk and talent so easy to dial down to a controllable level, like a volume control?

There was a time when investment bankers were opposed to making morality judgments in front of clients. As one joked, “it’s OK to tell your mainland clients that their credit ratings aren’t affected by their lack of morals”. Now bankers’ morals are being judged or embarrassed regularly in media. And it is affecting their future. Senior bankers already report that their teams are reluctant to execute some trades and take on business or clients because it is simply too much compliance trouble.

Rather than nationalise the banking system, which would promote even more hazardous attitudes towards risk, regulators are seeking to nationalise banking culture – to produce a hybrid of a profit (and risk)-oriented enterprise run by well-behaved, conformist managers.

The intentions are dubious – to rein in all speculative risk-taking activities in a risk-taking industry by restricting its rewards. Surely, this will backfire on everyone, especially the markets.

Antipathy and contempt still exist between regulators and bankers since they were forced to work together during the financial crisis.

John Thain spent US$1.2 million on a redecoration of his office suite in early 2008 when he became Merrill Lynch’s chief executive. He used a decorator whose clients included Michelle Obama, Steven Spielberg and Michelle Pfeiffer. Thain also generously paid his driver US$230,000 for one year’s work. He did all this during his tenure when Merrill Lynch suffered massive losses in the subprime real estate market.

Bankers explain these incredible numbers by describing them in the same terms of risk: “It’s all relative.” But post-financial crisis, governments morally perceive risk on an absolute rather than relative viewpoint.

While the most egregious and excessive pay and benefits packages are unlikely to resurface, arbitrarily limiting and clawing back bank pay will drive away the smartest and most innovative people away from finance.

And regressive policies are wrong for a time when growing demand for derivatives and other financial products is occurring in a volatile economy and market.

Why work for a gloomy bank when you can work for a Palo Alto company that … is trying to change the world?

Older, more senior bankers whose careers straddle pre- and post-financial crisis have few career choices and must subjugate themselves to the compliance-led and rules-driven banking culture until retirement. Indeed, senior compliance officials are being paid US$500,000 to US$600,000 a year – a huge sum for a non-business-generating position.

Even as a traditional service industry, investment banking used to beckon candidates with a sense of excitement, like you were entering an elite and exclusive club.

Popular culture used to embrace and sell that image to many graduates in movies like Wall Street, where insider trader was merely an occupational hazard. Nowadays, The Wolf of Wall Street portrays bankers as drug-addled and lap-dance-addicted fraternity boys. The public respects lawyers more than bankers.

Today’s deadening layer of bureaucracy is discouraging many new hires from spending more than two or three years in a bank before leaving the industry entirely or seeking positions in hedge funds.

Social media start-ups or technology titans like Google or Uber look more attractive to physics and engineering graduates who were regularly recruited into derivatives positions.

After all, why work for a gloomy bank when you can work for a Palo Alto company that makes robotic cars, builds search engines and is trying to change the world? No wonder senior bankers are whispering that they no longer need to recruit the smartest people.

Such scepticism would have been unthinkable eight years ago when JP Morgan Chase was defining the future of banking rather than hoping to be around for it.

Each successive remark by its chief executive, Jamie Dimon, appears more desperate in its tone and logic. He recently argued that breaking up JP Morgan’s universal banking model was necessary to defend against encroachment and domination by mega state-owned Chinese banks.

The primacy of American investment banking has come full circle.

Peter Guy is a financial writer and former international banker

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Robert Chaen

Global CEO-Founder of ChangeU and Movsha Movers & Shakers, Hero-CEO Whisperer, Writer, The #1 Alpha Change Expert, Father of Asian FireWalking Robert Chaen is an International Keynote Speaker, writer, researcher, and corp games designer. He is famously known to be the “Hero-CEO Whisperer”, 1-on1 coaching with many CEOs and Celebrities for corporate strategies, staff & office political issues, personal branding, and even public figure OSHA safety drilling called Drager Defense. He has transformed CEOs and managers in Coca-Cola China, TVB Hong Kong, Cathay Pacific, Hong Kong Airport Services, VADS, TM, Public Bank, Auditor General's Office Maldives, etc. He is the prolific creator and online Author of innovative management tools such as DragonCEO, Diamond Leader, Papillon Personal Effectiveness, OSHA Drager Defense, KPI Bank, etc. He is also the Founder of Movsha, an international networking with monthly mingles with MOVers & SHAkers, Angels, Entrepreneurs, CEOs, Celebrities, HR-PR-CSR, HODs, and the Most Influential IDEA people. ​Chaen is widely considered as one of the top International Platform Keynote Speakers for Resorts World Genting Senior Management Conference (Manila), 7-Eleven HK, Samsung, Coca-Cola China Mini-MBA @Tsing Hua University, Cathay Pacific, Hong Kong Jockey Club, The Story Conference where he interviewed Datuk Kamarudin (Chairman of AirAsia) and Siti Nurhaliza. He has been widely featured in TVB, AWSJ, CNBC, SCMP, The Star, and Sin Chew. As “The Father of Asian FireWalking”, he coached TVB celebrities (Ekin Cheng Yee-Kin) to walk on 650°C fire; and raised HK$68M in the world’s 1st and only live TV Charity FireWalk (TVB Tung Wah Charity Show), before Tony Robbins even came to Asia. If Robert can get you to walk on 650⁰C fire, he can inspire you to be THE BEST. He champions CN-HK-EU-US Tycoons to be philanthropic, and to be angel investors to support the next generation of Jack Mas, Steve Jobs, Richard Bransons, Steven Spielbergs, or Barrack Obamas. With some slick motivational speakers with fake doctorates out there, graduates often describe Robert to be "the most credible, empowering, truthful Coach" who believe in his graduates to believe in themselves. ​However, clients have described Robert as "The #1 Cool Badass Alpha Change Expert". He has the coolest first class stature, rapport and trust from clients. He will not hesitate to tell the badass truth ever so gently because clients are paying him big bucks to reveal the truth, find solutions, persuade the hostile HODs, and align cross-teams within the organization. Originally based in Hong Kong for 20+ years, he had worked with top Branding/Ad agencies at J Walter Thompson and Leo Burnett, and was a certified FranklinCovey (7 Habits) in USA, and NLP MasterCoach (USA). His warmth is known to soften the most hardened, resistant sceptics. He will inspire your team to Go for Top 1, or to be a Dragon CEO. With boundless energies, Robert owns 15+ successful business Joint-Ventures, and created unique products under his global VC network called Chaen's Angels VC. He is deeply passionate about ChangeUTH Youth CSR, Science-Based Medicine (vs. quackery), short films and Reality TV. Touched by a personal tragedy through the loss of his HK-born Portuguese wife, co-coach and business partner, Brenda José of 18 years, Robert explores the many ways in which the spirit world is communicating with the living with real scientific studies and evidence. He gives inspiring conferences on The Secret Afterlife.

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