It was a Friday in the fall of 2004 and Umber Ahmad had been invited to read a poem at the wedding of one of her closest friends. She was planning to catch a 7 p.m. flight from New York to Toronto when a vice president at Morgan Stanley called her in. The client in a big merger deal needed work done over the weekend. A mergers and acquisitions specialist, Ahmad had no choice. She canceled the flight and started revising her analysis of the deal, Bloomberg Markets magazine will report in its June issue.
The missed wedding was just one of dozens of dinners, family get-togethers and other events that Ahmad did not attend as she worked 70- and 80-hour weeks as a young associate at Morgan Stanley and later as a vice president at Goldman Sachs Group Inc. Ahmad, the Michigan-born daughter of a Pakistani doctor who taught at Harvard Medical School, likens the long hours and all-nighters to serving in the army.
“The military will show you that sleep deprivation is a form of torture,” she says. “Not being able to get regular sleep is a detriment to your life, to your health.”
Her life revolved around her job, she says. She dated another banker. Many of her friends were -- and still are -- bankers because they understood last-minute cancellations and upset vacation plans.
“You always remain close to the people you’ve gone to war with,” she says. “It’s a lot of misery they can understand.”
Ahmad says she loved her job, as exhausting as it was. “It was exciting; it was drinking from a fire hose every day,” she says.
She left Goldman in 2007 to start her own investment firm. She didn’t forget that in her rare leisure hours at the banks, she used baking to help ease the stress. So, in 2013, Ahmad founded Mah-Ze-Dahr Bakery, a New York–based luxury pastry company launched with celebrity chef Tom Colicchio. She is also a managing director at New York investment firm Specialized Capital Management & Advisory.
For Ahmad, banking was a springboard to her new life as an entrepreneur.
“As hard as it was and as trying as it was and as sleepless as it was, it also afforded me the opportunity to be where I am today,” she says.
Some of the best and brightest of Wall Street’s young investment bankers are bailing out of their high-paying, prestigious jobs at big financial institutions. Many are setting up their own businesses, especially in technology. While there are no precise statistics on the trend, data from the U.S. Census Bureau show that the number of employees aged 25 to 34 in the New York metropolitan area in finance and insurance fell to 109,187 as of the second quarter of 2013, down 19 percent from the second quarter of 2007.
Prestige and Riches
Forgoing a personal life has long been considered a fair exchange for the prestige and riches that can be earned in investment banking and trading. Competition remains intense for the coveted two-year bank training programs that pay graduates and new MBAs from $100,000 to $300,000 a year.
That talented young people are questioning these trade-offs doesn’t surprise Patrick Curtis, who worked as an analyst for two years at boutique investment banking firm Rothschild Inc. a decade ago.
“It’s definitely not worth the money,” says Curtis, 34, who now runs a career advice and networking website called WallStreetOasis.com. “You’re working 90 hours a week on average. It can go up to 120 when it’s really bad. Is it worth it? No.”
At elite universities, fewer MBA and finance candidates are willing to even consider a life of missed weddings, busted romances and deep-into-the-night deal negotiations. The percentage of Harvard Business School graduates entering investment banking, sales or trading dropped to 5 percent last year from 12 percent in 2006, while those entering technology almost tripled to 18 percent during that period.
At the University of Pennsylvania’s Wharton School, the percentage of MBAs entering investment banking dropped to 13.3 percent last year from 26 percent in 2006, while those entering tech more than doubled to 11.1 percent.
“There’s less willingness on the students’ part to make the sacrifices that they might have been willing to make five years ago, 10 years ago,” says Jonathan Shepherd, associate director of the MBA career and professional development office at the Harvard Business School and a former analyst at JPMorgan Chase & Co.
Banks are acutely aware of the too-high attrition rate among their young associates and analysts -- the titles carried by most junior bankers -- and have initiated programs to combat it. Goldman Sachs and JPMorgan, among others, are rethinking the way deals are brought to fruition.
’War for Talent’
“There’s a war for talent,” says Jeff Urwin, who was promoted in April to co-run corporate and investment banking at JPMorgan. “You’ve got to compete.”
One result is guaranteed days off to keep young employees from burning out. The banks are focusing attention on their M&A groups, where seven-day, 80-hour workweeks are the norm and the hours can run around the clock in a big deal like Comcast Corp.’s $45.2 billion offer to buy Time Warner Cable Inc. The banks involved: JPMorgan and Morgan Stanley.
Last August, Bank of America Corp. intern Moritz Erhardt, who worked in the firm’s London office, died following round-the-clock work on a merger. Though the official cause of death was an epileptic seizure, Mary Hassell, the coroner who investigated the death, said his fatigue may have triggered the convulsion that killed him. The 21-year-old banker was found dead in the shower at Claredale House, a student residential facility in East London.
“Moritz had a natural cause of death, though it’s not so natural that a young man should die like this,” Hassell said during a formal inquiry in November.
Bank of America said at the time that it would “review all aspects of this tragedy.” In January, the bank issued new guidelines saying that managers would “closely monitor work volume” among junior bankers and summer associates. The policy also recommends that analysts and associates take off four weekend days a month and requires that they take all their vacation days.
Erhardt’s death raised a more general alarm among bank executives.
“I’m not sure how you stop work if there’s a deal on,” Morgan Stanley Chief Executive Officer James Gorman told Bloomberg Television in January. Yet the incident in London, he added, “has caused everyone to step back and say, ‘Hey, have we got this right?’”
Managers at JPMorgan, which employs 1,000 men and women as associates and analysts worldwide, track their hours on a color-coded spreadsheet. Bankers who spend more than 75 hours in the office per week are marked in red; those who work fewer hours are branded blue or yellow.
Urwin studies the charts every week. He isn’t looking to see who’s not working enough. He’s looking to see who’s working too much.
“There are only two things you control in investment banking management: how you use financial capital and how you use human capital,” Urwin says.
Junior bankers who keep lighting up red, and the people who manage them, typically get a call from Urwin to find out what they are working on and if the hours are justified. If not, the manager requesting the work may get a warning.
Both JPMorgan and Goldman Sachs have formed in-house committees designed to improve the experience of their junior bankers. At Goldman, the resulting changes included the formation of a junior banker career development committee, several of whose recommendations the firm has adopted. One change: Goldman did away with its two-year training program in 2012 in favor of hiring new graduates on a permanent basis.
In an effort to reduce young bankers’ workloads, Goldman changed the way senior managers commission work so junior bankers don’t have to create a 50-page presentation for a client when a 15-page report would suffice. In October, Goldman began requiring entry-level bankers and slightly more-senior associates in the investment-banking division to take Saturdays off.
Curtis of Wall Street Oasis laughs at the idea that forcing bankers to take a few weekend days off will resolve the overwork issue.
“It’s not necessarily lowering the overall hours analysts are working,” he says. “It’s shifting it to Sunday nights and during the week. So they’re getting more all-nighters during the week.”
Kevin Roose spent three years following the careers of eight young bankers for his book “Young Money: Inside the Hidden World of Wall Street’s Post-Crash Recruits” (Grand Central Publishing, 2014). He says it’s good that the banks are taking better care of their junior bankers.
“But this is not a charitable act,” Roose says. “They’re losing a lot of their young people and they’re having a lot of trouble recruiting, so these banks are panicking about how to keep hold of the next generation.”
In the high-pressure environment of an investment bank, the typical professional stays on the job between seven and nine years before changing careers or leaving for other areas of finance, according to a study that will be published this summer by Alexandra Michel, who started her career as a junior banker at Goldman Sachs in 1992 and now teaches management at the University of Pennsylvania.
Michel, who has a Ph.D. in management from the Wharton School, has spent the past 13 years studying the working conditions of investment bankers. She has found that the long hours and stress begin taking their toll after four years.
“On year four, physical breakdowns occur, initially minor,” she says. “Chronic pain, insomnia, endocrine disorders set in. Pain is really common.” Weight gain, hair loss, anxiety, depression and generalized low energy are also common complaints, Michel says.
When severe stress kicks in, the young bankers are often able to perform at a high level only with the help of high-caffeine drinks, prescription stimulants and sleeping pills, she says.
“It’s whatever it takes to keep functioning,” Michel says. “So if you have to work around the clock, you take the chemicals you need to still be sharp and awake, and if you can’t sleep because you’re so depressed and stressed, you take a different set of pills.”
Michel is skeptical of the new programs to relieve young bankers’ pain.
‘Nothing Has Changed’
“As one set of depleted bankers leaves, the next is already moving through the door,” she says. “It isn’t bad for banking in the least, and that’s why nothing has changed.”
Executives can be less interested in their young assistants’ health than they are in getting a deal done, former junior bankers say. One recalls working on a deal through a nasty sinus infection. When the banker resisted flying out of town to meet with the client, the managing directors said it was mandatory.
The pressure from the flight ruptured the banker’s eardrum, which started bleeding. The team pushed on with the deal talks despite the fact that the banker had lost hearing in one ear. Upon returning to New York, the banker went straight to the emergency room, where doctors ordered no flying for the next five months, preventing the banker from attending future client meetings on crucial deals.
Former junior bankers say they quickly learned how to make do on four to five hours of sleep a night, especially during the financial meltdown in 2008 to 2009.
Hamilton Colwell started as a junior banker at JPMorgan’s structured-foreign-exchange desk in 2006, when he was 27. His specialty was helping clients manage risk through interest-rate derivatives. His skills were in high demand both before and during the crisis. In 2008 and early 2009, Colwell often worked day and night, he says, returning home only to shower and change.
In dealing with friends and family, “I learned quickly not to make promises I couldn’t keep,” Colwell says. He had a girlfriend. “Weekends away and dinners out with her were always sacrificed,” he says. “It quickly became normal.” The two eventually broke up.
After Lehman Brothers Holdings Inc. collapsed, the crush of work made Colwell, now 36, realize he couldn’t stay in banking. Even after the markets calmed, Colwell was still working 13 hours a day during the week and often on weekends. He says for a while it was invigorating. That faded.
‘I Saw the Light’
“I saw the light and realized that I needed to do something more meaningful,” he says.
After leaving JPMorgan in 2010, Colwell used the money he earned but never had time to spend to start a company called Healthy Mom LLC, which produces Maia Yogurt. A foodie in his meager spare time, he made the first batch on the stove of his Manhattan apartment after his cousin bet him that he couldn’t make a tasty yogurt that would also be good for her during her pregnancy.
The company manufactures its products at a dairy plant in Harrisburg, Pennsylvania. It now sells 100,000 cups a week of the low-sugar, low-fat yogurt, which is enhanced with probiotics, to supermarkets including Whole Foods Market Inc., Safeway Inc., Giant Food Stores LLC and Stop & Shop Supermarket Co.
Roger Wu, who was an intern at Goldman Sachs in 1999, also decided that the banker’s life was not for him. He remembers being angry and frustrated when clients made unreasonable demands, such as requesting at the end of the day a presentation for the following morning.
“So guess who’s staying up all night?” Wu asks. “You are, because the client gives you this thing at 6 o’clock, and they need it on their desk by 9 a.m.”
Wu, 37, recalls that even when he wasn’t actually working, his life was not his own.
“A lot of what you’re doing is twiddling your fingers,” he says. Leaving the office, while sometimes encouraged, isn’t really a viable option because the work flow isn’t predictable.
“If you go to a museum or the movies, your BlackBerry goes off and you’ve got to get back to the office,” Wu says.
He turned down a job offer from Goldman to join a technology company that converted organic waste into fossil fuels. He currently helps run Cooperatize Inc., a business-to-business advertising platform he co-founded with a friend.
While the 80-hour workweeks are grueling, Len Podolsky says, they also generate enormous camaraderie in the bullpen -- the group of cubicles where junior bankers are usually clustered. Podolsky left JPMorgan last year after almost three years as an associate on the bank’s health-care team. His group advised health insurers, medical-device companies and other health-related firms on strategic deals.
“Culture really matters,” says Podolsky, 33, a Wharton graduate. “How the bullpen interacts is critical. You can work 80 hours a week and not mind it so much because the people you work with are awesome.”
Podolsky now works as director of operations at Connolly LLC, a health-care audit firm based in Wilton, Connecticut. While the pay is about the same, his hours are better, and he now gets to make decisions on staffing and strategy instead of giving advice to other executives, he says.
On campus, meanwhile, career placement officers say students can now choose among jobs at hundreds of tech companies and startups. Many would rather try to get in on the next Facebook Inc. or Tesla Motors Inc. than work a grinding schedule in the bureaucracy of a big bank.
Sometimes the decision is personal. “A lot of them have parents who lost jobs in the financial crisis, and that’s led to a distrust of large corporations,” Harvard MBA career director Shepherd says. The financial crisis, negative press and the Occupy Wall Street movement have helped fuel the defection from large corporate finance firms.
“Big, in general, is bad,” Shepherd says.
Recent graduates are drawn to smaller, more-nimble firms, says Pulin Sanghvi, executive director of career services at Princeton University.
“Companies that didn’t exist two or three years ago are now hiring in force,” he says. “There’s just more choice for students.” And the students want to go to a job where they don’t start on the bottom rung.
“For our students, finding a job is less of a concern than finding the right job,” Sanghvi says. “What matters most to them is where they think they can make a difference.”
Taylor Russell, who’s pursuing a master’s degree in finance at Princeton, was recruited by some top investment banks. He considered them, but ended up rejecting the dealmakers in favor of asset manager BlackRock Inc. for his internship.
“Work-life balance is important, and that was a big part of my decision-making process,” says Russell, 25, who spent three years teaching high school math and coaching swimming before entering Princeton. While the banks have their own in-house asset management divisions, Russell says he liked the more relaxed culture at BlackRock and thought he could have greater impact managing risk for individual investors.
“Having a place where my personality fits in is more important than having a bigger bonus at the end of the year,” says Russell, who has an applied math degree from Brown University. “Either way, I’ll be making a good living.”
No Thanks, Banks
Russell’s Princeton classmate Karen Leiton was recruited by Goldman Sachs, JPMorgan, Citigroup Inc. and hedge fund Bridgewater Associates LP, then chose an internship at the World Bank, where she will make about a third of the compensation. The 26-year-old Colombian worked for Banco de la Republica, her home country’s central bank, from 2009 through 2013.
Leiton, who has an undergraduate degree in international finance, says, “Working in the markets is very exciting for some people, but people that work in the government aren’t there for the money. They are there because they can have an impact in the long term.”
Colwell, the yogurt maker, says his grueling schedule at JPMorgan helped prepare him for life as an entrepreneur.
“My work is much, much more difficult now,” says Colwell, whose yogurt company uses only locally sourced milk from grass-fed cows in rural Pennsylvania. Yet there’s a big difference between being the first employee of a new company versus just one of JPMorgan’s army of 250,000, he says.
As punishing as her jobs in finance were, Ahmad, the banker turned baker, has no regrets.
“We actively chose to be bankers; we actively chose to live that lifestyle,” she says. “I couldn’t have learned what I learned at any other job. It’s an accelerated education.”