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by Derek Loosvelt | June 06, 2012


We've recently closed our annual Banking Survey and are currently compiling the results. This means that a new Vault Banking 50 is forthcoming soon. (Truth be told, it's coming the first week of September). In any case, the point is that the results of our survey are in and, although I can't divulge any specifics until the rankings release, I can say that there was more than a little movement near the top of the rankings this year, with some smaller investment banks gaining ground on the so-called bulge-bracket banks.

And at a glance at some of the qualitative comments we received, this movement appears to be attributed, at least in part, to the ongoing difficulties Wall Street banks are facing when it comes to compensation. Which is to say that the big banks can no longer pay its ranks, for better or for worse (better if you're a 99 percenter, worse if you're an M&A VP), like it's 2007. As a result, there are several disgruntled bankers inside the halls of the bulge-bracket banks, some of which say they might start fleeing for greener waters—also known as the PE and hedge fund industries.

Which will surely be a problem for the big banks in the next 12 months. But perhaps what's worse is the problem the big banks might be facing for the next 12 years. As one insider from one of the top investment banks on the planet puts it (via the Vault Banking Survey):

I would say the biggest threat to the business today is employee morale, particularly at the lower levels. The work/life balance is not what it should be, and the prestige that once existed from working at a bulge-bracket bank is no longer so strong. The most successful college students want the most prestigious and lucrative jobs—they want the jobs that people “ooh” and “ahhh” at when they tell them where they are going to be after graduation. That set of companies is shifting from Wall Street to the technology sector, where companies like Google, Facebook, and Groupon are taking away a lot of top talent from the banks. These companies offer similarly competitive salaries, the chance for a more relaxed work environment, great perks such as free food and drinks, time to exercise, and, for the most part, shorter workweeks.

Indeed, just as I've long suspected: new undergraduates and MBAs are no longer oohing and ahhhing (but are perhaps boooing and sighing) when a bud of theirs informs them that they'll soon be working for Blankfein or Dimon. In other words, I've had a hunch for some time that Page and Zuckerberg have been poaching the would-be masters of the universe from career centers across the top-tier-college universe, and this quote above more or less confirms it.

But just in case you're not convinced, let's hear from another big swinging bulge-bracket banker (who also took our survey):

2011 was a terrible year for pay. 2008 was worse. 2007 was still my best year for pay. 2009 and 2010 were better. But 2011 was a step back again. At the end of the day, you’re only willing to work these terrible hours because you’re paid for it. 2011 didn't provide the compensation I expect for working this hard. Frankly, I’m starting to think more about what I really want out of a job and questioning whether this is it. The sad thing is I really love what I do and the people I work with. But the lifestyle is awful.

Lloyd, Bob, James, and Jamie, take note. Pay up or your big-swinging bankers will soon be sending their resumes West, where everyone from the COO on down hits the road every day at 5:30 p.m. (you go, Sheryl!).

Truth be told, it's (nearly but) not all about money on Wall Street. Some insiders sincerely care about their clients' experience. For example:

Our regulators and our internal read of upcoming regulatory changes have made doing business with us extremely painful for clients. We have onerous documentation requirements that require clients to spend hours reading tens of pages of disclosures. We have processes in place that, while designed to protect our clients, ultimately result in laborious workflows to get simple tasks done. There is an overwhelmingly feeling of red tape and bureaucracy, which is leading to low employee morale and frustration.

I feel your frustration, dude. As well as your clients' pain. Sounds like you're all stuck between a rock and regulation. And despite that recent IPO mishap, it sure sounds like the Alley and not the Street might be the place to be in the coming years.

In any case, check back this summer as we release further previews (of the qualitative as well as quantitative type) of the forthcoming 2013 Vault Banking 50.

Read More:
Goldman Sachs or JPMorgan: Which is More Prestigious?
What the BLEEP is Work/Life Balance?
4 Tips to Help You Leave Work Earlier
WARNING: I-Banking May Cause Obesity, Depression, and Rage