Dark skies are forming over Mordor. Incentives for juniors working in financial services are not meaningful any more.
My friends, across a whole range of City jobs, are working harder and harder for less money, in an increasingly expensive world.
In private equity, juniors' vesting periods for carried interest remuneration can be up to nine years. Bonuses in hedge funds have to be reinvested into the fund leaving very little cashflow for analysts who sit down at 7am and rarely move until 9.30pm. In an environment of increasing volatility, being a junior in a hedge fund these days is a bit like being force fed Lysergic acid and chained to a 14-hour roller-coaster.
All the while, living costs are shooting up. Rental yields are increasing, mortgage terms are becoming more punitive unless you have a large deposit, travel costs, tax, and so on are all rising. Juniors need money now, not promises of jam tomorrow. Increasingly, this will differentiate desirable firms from undesirable firms. If you're in the enviable position of being able to choose between several companies, the one with more upfront cash will have a comparative advantage.
Unfortunately, negotiating upfront cash is becoming more of a challenge. These days, juniors don't have a leg to stand on. Demand for jobs outstrips their supply. It's difficult to negotiate in order to improve our lot, because there will always be someone ready to do our job for less. A commodity trader friend of mine works in a very niche market but regularly claims that if he loses his job there are 30 unemployed traders waiting on the sidelines to step in if he gets the boot.
This has always been the case for "the real economy" outside finance. Perhaps we are getting our just desserts. Either way, they're not very digestible.
The author has worked in a number of City roles and fantasizes about retiring early.