• Benjamin Holland

What’s it really like to work in Investment Banking?

Updated: Mar 26, 2021

It’s often hard to know what working a job is really like until you’re there yourself, but last week, an internal presentation from Goldman Sachs titled “Working Conditions Survey” was leaked on Twitter and gave some insight into the brutality of the working conditions faced by first year analysts. Investment baking is surely a high-pressure, high-octane job, but everyone has their limits, and it may appear that Goldman Sachs is sending their employees to breaking point. So, what can investment banks do to improve the welfare of their employees? And is anything really likely to change?

Our Survey Says...

The survey of 13 first year analysts at Goldman unveiled a number of work-life issues:

- Average 98 hour working week,

- Average 5 hours of sleep per night,

- Significant negative impact on mental health,

- Significant negative impact on physical health,

- Inability to maintain relationships with friends/family,

- 77% of respondents had been subject to workplace abuse,

- 92% of respondents reported being frequently ignored in meetings,

- Very high likelihood of having to resign within the next 12 months if current conditions continue.

Among these findings were a number of personal quotes that summarise the experience of the analysts individually:

“My body physically hurts all the time and mentally I’m in a really dark place.”
“I didn’t come to this job expecting 9am-5pm’s, but I also didn’t expect consistent 9am-5am’s either.”
“Being unemployed is less frightening to me than what my body might succumb to if I keep up this lifestyle.”

At the end of the survey, the analysts gave some recommendations that they felt may improve their work life. Some of their proposals included:

- A maximum 80-hour work week,

- More time to work on client meetings,

- More immediate team meetings to plan projects and avoid time crunch,

- Prohibition on any work being done after 9pm on Friday and all-day Saturday - known as the ‘Saturday rule’.

How have Goldman responded?

Goldman Sach’s CEO, David Solomon, has said that the bank will strengthen its ‘Saturday rule’ in accordance with the analysts’ proposals, claiming that the current working conditions are due to historic levels of client activity and business volume. Additionally, Goldman has committed to hiring new junior bankers across many divisions to reduce workload and trying to redistribute workers more effectively according to where workload is highest. Automation of simple tasks is also being investigated as a potential aid to unnecessary tasks.

Though some of these proposals sound promising, in an address to the bank’s 34,000 employees worldwide, Mr Solomon laid out his expectations for continued high demand for Goldman’s services, and therefore high workload. And then, to his disgruntled employees, he asked them to always “go an extra mile for our clients, even when we feel that we’re reaching our limit”. Clearly then, Mr Solomon thinks these analysts know what they signed up for.

Solomon has also pinned the exceptionally low mental health to the pandemic, rather than his work culture, believing that working from home is still inefficient and must be abandoned as soon as it is safe to do so. A former Goldman analyst, who quit after two years at the bank, has supported this view, believing that the in-office camaraderie at Goldman supported his mental health, whereas "being at home on your own is not conductive to mental health."

Is all Investment Banking like this?

The requirements of investment banking are unlike nearly all other jobs, and it may be that Goldman Sachs’ analysts aren’t having a significantly worse time than analysts at other banks. Back in 2013, for instance, Moritz Erhardt, 21, was working at Bank of America Merrill Lynch when he was found dead in a shower in his London flat after working for 72 hours straight before having an epileptic seizure. Rumours have it that the scandal at Goldman has triggered an outcry across investment bankers from junior analysts, with one junior Morgan Stanley banker claiming that the Goldman report was "all his colleagues could talk about", and that they were motivated to speak up to.

Long work hours are an integral part of investment banking, and they are justified by some of the biggest pay checks in the world for graduates - according to Wall Street Oasis, Goldman pays their first-year analysts an average of $123,500 a year! On the other hand, other parts of the lifestyle highlighted by the working conditions report, such as the toxic work culture, and the effect this has on mental health are surely unnecessary. Other banks have recently launched new ways to improve the work-life balance of their employees, though. For instance, the new CEO of Citi, Jane Fraser, has recently designated Fridays as ‘zoom-free’ and reminded employees to try to schedule calls within traditional working hours.

Many banks advertise their ‘unique work life culture’, often as collaborative, team-based, and sociable. It is likely that a genuine culture of this kind would offset the mental health impacts of long-work weeks and eradicate workplace abuse - though it is certainly hard to tell how genuine this culture will be when nearly every bank claims almost exclusive rights to this kind of work-life. Who can really say what conditions are like until you find yourself actually working at an investment bank?

Will the long hours ever change?

Despite the introduction of some schemes, like the 'Saturday rule' being what the Goldman analysts themselves have requested, clearly this alone is insufficient to bring about any actual material change in the work hours of bankers. Simply restricting when bankers can work, without actually changing the workload, will if anything make the situation even worse.

This effect is exactly what Deniz Okat and Ellapulli Vasudevan found when studying the effect of the 'Saturday rule'. They analysed data on taxi rides between 10 investment banks in New York City and residential neighbourhoods, and found that the presence of a well-enforced 'Saturday rule' significantly increased the number of late night-taxi rides on other nights of the week. Bankers weren't working less overall, just cramming more into less time.

So, what will reduce the hours of young investment bankers? One major issue is that the marginal cost of a young analyst's time is effectively zero. Investment banks charge flat rates, rather than charging clients by the hour, so it is in the clients' interest to make the young analysts work every hour possible. Therefore, perhaps changing the fee structure for young analysts' hard work can better equilibrate the supply and demand for their services with the clients.

Whether investment bankers will start charging by the hour is impossible to say, but unilateral action by one bank seems highly unlikely, as it may be poorly received by clients. Whilst the 'Saturday rule' may be limited in its positive impact, certainly the hiring of new workers would reduce workload. Surprisingly though, one former Goldman analyst claimed that he "didn't want to work less [...] this scenario where you hire twice as many analysts and they work half as much? I wouldn't want to work in that environment." It seems then that there are mixed feelings in the industry concerning the young analysts' workload, though this does raise the question of why this particular analyst ever quit.

Far-above-average work hours seem likely to remain across investment banks, which is bad news certainly as long as people continue to work from home, and for those whose workload expectations going into the job fall short of the reality. That being said there are huge benefits to working in investment banking that have to be weighed against the necessary ills (like long working hours), and those that banks must try to eradicate (such as workplace abuse). Investment banking certainly offers you a vast skill set, the opportunity to work with very talented people, and highly engaging work. How this weighs up against the long hours is a personal taste, though a toxic work environment is something that no one is signing up for...