By Strauss Cooperstein
Employment opportunities at investment banks remain highly sought-after. But do six-figure salaries make the progressive wear on young analysts’ minds and bodies worth it? Several recent outcomes as a result of the Covid-19 pandemic and skyrocketing markets suggest they are not. Conversations regarding mental health in the workplace became increasingly contentious when a slide deck from 13 anonymous first-year Goldman Sachs employees circulated, each describing how 100-hour weeks had the ability to put them “in a really dark place” or feel “like a disposable-number cruncher” and a “punching bag.”
The pandemic has directly added to the amount of time analysts spend staring at a screen waiting for blunt emails or comments on their work rather than directly approaching their managing directors and collaborating organically. Additionally, studies show that managers consistently assigned new tasks to analysts during the pandemic, making use of their newfound efficiency working virtually. As a result, young analysts feel increasingly isolated from the banking world, a job they expected would be more relationship-driven.
Another contributing factor to the burnout sentiment is the IPO market exploding with special purpose acquisition vehicles (SPACs), blank check firms used to take companies public. In 2021, SPAC mergers of roughly $165 billion have already surpassed the previous year’s figures and are now going public at a more frequent rate than traditional IPOs. This rapid pace of deal volume and mergers, along with a trend of associates leaving for private equity firms, puts immense stress on junior analysts to stay afloat.
To address these concerns, bank executives have sent out memos to employees pledging their commitment to firm policies against working on Saturdays, hiring more and relocating internal talent to busier desks, and in some cases even giving lower-tier employees bonuses as a reaction to “unprecedented deal volume.” However, these policies in bulge bracket banks still face scrutiny for limited enforcement and accountability. Bank culture is driven hierarchically such that senior management will always see new bankers as “free limitless resources.” While analysts can easily be replaced by fresh hardworking talent, it is not enough for management to say, “we’ve been there before.”
Times have changed such that the sheer volume of work can prevent productivity and value adds for the bank. Therefore, some structural changes to improve efficiency are being considered, including preventing last-minute cramming for meetings along with more performance bonuses for desk heads, like analyst class retention rates. Until these work-life balance changes are fully implemented, banks will continue to compete with private equity firms and technology conglomerates who are now expanding their share of young analyst talent.