Young Money? Perception vs Reality on Wall Street

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There has been a lot of discussion around Wall Street taking the nation’s best and brightest away from more honorable fields, and how the work/life of Wall Street isn’t what it used to be. Two main sources of this: an article titled “How a Duke Undergrad With No Finance Background Got Lured by Goldman Sachs” by Laura Newland (who, I note, had one interview with GS on campus and likely never received a 2nd round, and seems to just be attempting to parlay the fact she got an interview at Goldman Sachs into selling copies of her self-righteous book), and also Kevin Roose’s book ‘Young Money: Inside of the Hidden World of Wall Street’s Post-Crash Recruits,’ which highlights the lives of some people during their first few years on Wall Street. I think Kevin actually did a thorough job of tracking these kids and being candid in his interview process. And I definitely have seen some of the things he describes first hand.

I myself am one of these recruits – I started working at a bulge bracket bank in the 08-09 crash time period and tons of my friends from college did as well. Kevin Roose’s marketing for the book focused largely on how some of the people who joined Wall Street ended up being depressed/bummed out, while Laura Newland’s columns have nothing substantial to say about anything…because she never worked in finance and has minimal exposure to it outside of getting dinged at interviews…but she does talk about how kids might be tricked into working in finance, which is an interesting point she brings up - how do people react to working in jobs that they don't really want to do?

I think Roose’s book is largely held back by selection bias – the people who were the most burned out/depressing were the most willing to speak with him – Roose said as much on the Daily Show. If he had interviewed me – someone who actually liked my job, liked the people I worked with, and still find it rewarding – his book would have likely been significantly less marketable, yet more accurate.

In my prior blog posts, I think I’ve focused primarily on the different types of trading, different roles on the trading floor, and things specific to credit. However, I think its worth throwing in my two cents on the different ways people react to working in finance and how they end up as individuals a few years into it.

I’m going to categorize the different types of people you encounter on Wall Street following their initial few years. While many people start off as hungry, hopeful trainees after they graduate from college, within 3-4 years you see a segmentation across pretty much any banking training class.

Most of these people descriptions are based off of my own network. Background – I went to a target, worked at a BB, but have met lots of people at different groups across the street, along with my own training class.
These archetypes are often have hybrids, but I think Kevin Roose’s book overwhelmingly focuses on a select few of these. After I go over the types of personalities that come out of the first few years of finance, I'll try to pinpoint the perception problem.

The banking burnout

This person is most likely the type Kevin Roose interviewed. I would classify them as the people who go in, do their work, and check out as soon as possible because all they think about is how they hate their job and want to leave.

I would say the most common background for a burn out is a college kid who didn’t know what they wanted to do until late junior year of college, when they started noticing the on-campus recruiting. They likely had a strong GPA and a decent major, decided to try to get an internship in finance, ended up networking and somehow landing a gig, helped largely by interview prep guides and the fact they went to a target school.

Once they start on Wall Street, they quickly realize they are not especially intelligent/special in the context of finance, yet don’t know what else to do. Slowly they get darker bags under their eyes and see themselves fading away, and they don’t know what they want to do with their lives. These guys will eventually get an MBA or something, where ideally they’ll revitalize themselves for two years before somehow ending back in investment banking afterwards.

The biggest problem with the burnout is that they complain a lot, but don’t do anything about it…unlike the next person…

Green Grasser

This is a person who I am more fond of than the burnout, but can be annoying in their own right. The term comes from the ‘grass always being greener’. Unlike the burnout, who realizes they are miserable and aren’t being successful yet stays in finance for the paycheck, the ‘Green Grasser’ leaves finance to join a start-up. Now, these aren’t the people who are too smart for finance and start their own companies, and certainly aren’t entrepreneurs who are raising seed capital and being a rock-star developer in the process. Most ‘Green Grassers’ typically join a start-up company in a marketing/biz development role and don't do anything any more difficult than banking from an intellectual standpoint.

What differentiates the Green Grasser from the average person who works at a start-up is that they won’t stop talking about how great the start-up world is. These people are the most likely to start a blog detailing their heroic journey of leaving investment banking and working at a smaller company, constantly post on social media about the awesome things they are doing, and will make a point of mentioning they work at a start-up as much as possible. EDIT: They will also constantly upload TED talks and random things from Quora in an effort to feel even more intellectual.

These are people who quickly realized they weren’t cut out for banking or didn’t get the opportunity to get to private equity or a hedge fund, yet still wanted to differentiate themselves from their banking peers as quickly as possible.

These guys are typically on the opposite end of the spectrum from the…

Faux Financiers (pronounced Fiiiiiii like ‘me’, not ‘my)

These are the guys who are the living, breathing stereotypes of people working in finance. They wear fancy shoes, always wear a suit (even when they don’t have to), and sleek back their hair. They walk importantly, act confident…yet in many cases, they really aren’t that important. Yes, these are the guys who I think largely give finance a bad name – people who come off as arrogant and think working in finance makes them better than everyone else, when in reality they are 2 years out of school and booking trades/making pitchbooks for a living. These are also the most likely to wear a full suit out to a bar on weekends.

These guys largely define themselves by their career. When they are around people who don’t work in finance, they’ll try to mention where they work as much as possible. When they are around other people who work in finance, they’ll typically not say much because they don’t want to get laughed at by people who know they aren’t actually important.

Usually, these people outgrow their ‘I will impress everyone around me’ or else will live a life of being considered a tool.

Normal investment bank employees

I would say this is the Wall Street I felt most at home with on the sell-side. These are people who generally work hard, are outgoing, and don’t really view themselves as special. A lot of buzz words get thrown around about being “creative” and “empowered” in finance – but I want to say over 50% of people who work in mid-level finance are people who acknowledge its not the best job, that they aren’t particularly special at this point in their careers, but know that having a steady job in a fast-paced industry is a net benefit to them and their families.

They typically have personal lives and families that are important to them and they view their job as a means of providing for their family, as opposed to a way to make themselves feel better about themselves relative to their peers.

The true investor

These are guys who did their time on the sell-side and made the move to major PE/HF shop, aced their technical, build models in their spare time, and actually enjoy investing. These are guys who made it to the buy-side and are fighting the battle to get to the top of the Wall Street pyramid. The difference between these guys and ‘faux financiers’ is that they are actually successful – they’ve worked hard, are naturally inclined towards financed, aced interviews, and now want to capitalize on their rising position in finance. They don't brag about what they do - they just enjoy working.

These are people who read the Wall Street Journal cover to cover and find actionable investment ideas on blogs in their spare time. These are guys who don’t really care too much about what they wear or how they come off, because they don’t care about impressing people as much as they do about impressing their bosses. These guys can come off as dbaggy, because they’ve spent more time with 10-Ks than they have at bars. They typically don’t have the best social skills and think watching the market opening is really fun.

The people who don’t work on Wall Street but have a lot to say about it

This is where Laura Newland’s column comes in – in her column published on Business Insider, she specifically calls out the world of finance. From what the column tells me, she was one of about 200 people on her campus to get a 1st round interview, and somehow this gave her the right to criticize Wall Street as a whole.

I often see the people who have the most to say about finance are people who never worked in it, read HuffPo too often, and probably would have taken an offer from GS/MS if they had gotten one. They typically talk about how ‘they don’t want to work a 100 hours’ and how ‘they want to have a life’ as reasons why they don’t work on Wall Street – yet they don’t actually know what Wall Streets like, and are basing most of what they say off of the horror stories they’ve read on the internet.

A lot of these people tend to do jobs that are similar to finance – at the bottom of Laura’s column it states she works as a management consultant. (http://www.businessinsider.com/college-students-recruited-by-goldman-sa…)

These people are worse than the Green Grassers because they often talk without knowing what they talk about, in an effort to be self-important. In many cases, they didn’t even land a finance job, but attempt to make themselves feel better about it by acting like its not for them anyways. And then there are just people who criticize Wall Street based on CNN headlines. I have a lot of criticisms on Wall Street, but there are things in every industry that have a blind eye turned to them.

Why is public perception so skewed?

I highlighted a few high-level archetypes above: the burnouts, the green grassers, the faux financiers, the 24/7 investors, the people who criticize finance to make themselves seem important, and the normal everyday people who make Wall Street run.

In my experience, more than 50% of people I’ve worked with are just normal employees who kind of like their jobs, sometimes they don’t, but they don’t make a big fuss about it. Maybe 15%-20% are burnouts, while you have a few of the other types in there.

It seems like Wall Street’s reputation is largely driven by the faux financers (tools), who make the rest of Wall Street seem like a bunch of tools, or the burnouts, who make Wall Street seem like a miserable place to work. And the people who open their mouths to complain about Wall Street are often people like Laura Newland, who has no experience in finance, and likely uses her friends’ Facebook updates and snippets from places like WSO to make up the majority of her knowledge base regarding finance. Its become trendy to criticize Wall Street…but in reality, most people who work there just want to provide for their families.

And herein lies the problem: Wall Street's reputation is determined by a few, because the majority aren't interested in the marketing game. Kevin Roose's book focuses on the burnouts, who largely dislike their roles. And then, on the other side, you have writers/bloggers/commentators who attempt to further their own careers by seeming 'different' by criticizing Wall Street. Then you have people like me, who just want to read some 10-k's and bond indentures, then go home and watch the Knicks blow it again.