Monday, October 12, 2015

Career Wanderlust On Wall Street Faces Obsolescence

Wall Street's top performers usually move around a lot. They jump from one firm to another every few years if the gaining firm finds their high-powered connections or book of accounts desirable enough to warrant a signing bonus. The upside to such wanderlust is a fatter paycheck for a small number of people. The downside is a mercenary culture that rewards greed over loyalty. The future may be different.

A specter of automation haunts Wall Street. Robo-traders can do everything human brokers can do at much lower coast. The AIs fronting automated portfolio rebalancing systems can't jump to rival firms and don't need bonuses. Their programmers and domain experts can jump firms, but there are far fewer of them than today's hordes of financial advisers and investment bankers. The hordes will be gone in a few years and Wall Street firms will be more efficient in their absence.

I used to work at a wealth management firm that tried to pretend its career revolving door did not exist. The "You and BS" people bragged about poaching top earners who brought clients from other firms, but stuck loser labels on their own defectors. Every firm thinks that way, even the once-mighty Merrill Lynch whose "Mother Merrill" culture encouraged people to stick around. I meant what I said when I told prospects I was loyal to my firm. They must have though I was naive not to have a mercenary mindset. That may be why they never wanted to invest with me. Many people really do reward disloyalty, as if it were a sign of maturity.

The most disloyal people end up with the biggest bonuses after years of cheating their teammates. Perhaps that's my bias showing, or just a broad truism. Bonus pay to reward wanderlust may not directly reflect the competence or integrity of a prized hire. If the pay is based on the hire's proven trailing revenue then it has everything to do with the winning firm's revenue. The future of AI relationships means all of a firm's human best practices will be permanently recorded in computer code. No ethically challenged humans need apply. Money formerly earmarked for bonuses will return to clients as saved transaction costs or to shareholders as dividends.

Wanderlust has a point if it diverts performers away from trouble. Sometimes the only way out of a bad job situation is to say goodbye and never look back. That worked for me once I realized that no investment firm or client would ever care enough to pay me for my work. It still works for a little while longer, until AIs copy all of the human skills they need.