The way one M&A headhunter describes them, careers in investment banking in 2014 are tantamount to working in a Welsh coal mine in 1984. "People are desperate, of course they want to get out," he tells us. "They've looked at banking and realized it's an ex-growth industry. There aren't the opportunities there used to be. And then they look at the senior staff in banks - at their managing directors - and they figure they don't want to be like them anyway. All that stress and travel. They want to do something else instead. They usually want to get into industry."
The headhunter in question might be accused of exaggerating. In investment banking divisions (IBD) at least, growth isn't exactly extinct. Analysts at Morgan Stanley are predicting that IBD revenues will increase by 10% in 2014 compared to 2013. At Barclays and Goldman Sachs, M&A revenues were up by 155% and 131% respectively in the three months to June compared to one year before. On this basis, M&A traders can hardly claim to be stuck in an industry in an advanced state of ennui. Fixed income traders have more reason to complain - especially FX and rates trades, where revenues have declined 70% in five years.
Nonetheless, there's unquestionably a sense that something's up - and not just in fixed income. Mid-ranking bankers on six figure pay packages in London nowadays are more likely to reside in genuine ghettos than ghettos of the rich and privileged. Promotions have become elusive. Senior and mid-ranking M&A bankers are undeniably quitting for industry. The latest post-banking poster boy is 46-year-old Antony Noto, the ex-Goldman M&A icon who's leaving to become the CFO of Twitter. But Noto's not alone - last month, 35-year-old Anthony Leung, a fomer director in M&A at Credit Suisse, quit for Tescos. As employers of choice, banks are being beaten by supermarkets.
For all the residual disaffection, however the flow out of banking is more drizzle than deluge. There's a reason for this: comparatively, banking still pays very well. "Most people who leave corporate jobs take a pay cut," says Dom Jackman, founder of website Escape the City. "For that reason, they're usually aged between 25 and 35. The older you are, the greater your responsibilities and the harder it is to leave."
Leave banking in your 30s and still make serious money
Nonetheless, it's not unheard of for escapee bankers in their 30s to find lucrative alternatives. Take Dr. Nick Cooper, a former Goldman Sachs VP who quit in 2005 to co-found Salamander Energy, before leaving Salamander in 2011 to become chief executive of Ophir Energy, an Africa-focused oil and gas exploration company. Last year at Ophir, Cooper earned just over £1m including bonuses - not bad when Goldman is under intense pressure to curtail its compensation.
Cooper has an MBA from INSEAD. But Natalie Nahum, a former VP in M&A who coaches career changers at the London Business School, says it can be possible to quit M&A and go straight into industry with neither an MBA nor an accounting qualification - as long you work for former clients. Both Noto and Leung fall into this category.
However, if you're a mid-30 something M&A banker and job offers from clients aren't forthcoming, an MBA might still be necessary. In this case, you might want to enrol at IMD, the Swiss business school with a reputation for training older MBAs and dispatching them to industry. At IMD the average MBA is aged 31, compared to just 27 at Harvard Business School. Following the IMD course, one third of MBAs change all three dimensions of their careers (location, industry and function), whereas at London Business School, for example, recent employment figures suggest a tendency to use an MBA simply to progress in the career you were pursuing before the course began.
"People will often come to us from banking and will say that they want to go into industry," says Janet Shaner, director of programme design and delivery at IMD. "But the reality is that you need to give companies a reason to hire you - ideally you need to build on the experience you already have and leverage that for your next job." In other words, if you're an M&A banker who's worked on a pharma team, approach the pharma industry for your post MBA job.
IMD charges a CHF60k ($67k) for its one year MBA course. The average salary upon graduating is $132k. In banking terms you won't exactly be rich, but you'll still be earning more than the national average.
Leave trading in your 30s and make $600 an hour
It's harder to escape trading in your 30s and do something else instead than it is to quit banking. Ex-traders who don't join hedge funds are more likely to be found sitting in their spare rooms than on the boards of publicly listed companies.
Steven Goldstein, a former rates trader at Credit Suisse, says he tried trading from home when he first left the City in 2009. "I didn't really enjoy it," he confesses. "People think it will be the ideal lifestyle. That you can sit on a beach and trade under a palm tree or something, but it's not really like that." Goldstein retrained as a performance coach focused on helping senior traders who are still in the industry. He charges £350 ($600) an hour for his services. "That's the going rate."
Other ex-markets professionals have gone into headhunting. The Omerta Group, a top London-headhunting firm with offices in New York, Singapore and Hong Kong, has a thing for hiring ex-traders and salespeople into its consulting roles. Last year, for example, Omerta recruited Josh Gonnella, a former global co-head of rates sales at UBS, as head of its U.S. office. However, Gonnella only stayed at Omerta for 12 months before becoming head of rates sales at Lloyds Banking Group. Sometimes you get out of banking in your 30s only to go straight back in again.
Ex-Goldman bankers warn: get out of the industry before you’re 30, or else
Invaluable advice for bankers in their 30s, from bankers in their 40s
When a million isn’t enough: why top bankers are struggling to get by
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