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Morning Coffee: JPMorgan juniors say MDs expect them to be in the office full-time. Some hedge funds are recruitment firms in disguise

Here’s a question that really ought to be on banking internship interviews, in order to weed out the candidates who have a clue from those who are tragically incapable of reading between the lines:

“Managing Directors are expected to be present in the office five days a week, while more junior staff are allowed to work two days remotely.  How many days a week are junior staff expected to be in the office?”

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It’s a trick question – the two days that junior bankers are allowed to work from home are, of course, Saturday and Sunday.  Although no HR department will ever put this in their interviews, because they don’t want to undermine their own policies (this particular one is from JPMorgan), it’s just not credible, in a competitive industry like banking, to believe that your boss can be in the office when you’re not, without affecting your career.

The pandemic, it seems, was a brief aberration rather than a complete change in the culture of investment banking.  Although other industries have adapted and reinvented their office cultures, “presenteeism” has always been a core value of most investment banks – in fact, many places had an unofficial rule that not only could you not take remote days, but juniors could not leave until the boss had done so, whether there was any work to do or not.

What’s interesting is that many banks seem to have given up on any attempt to justify this in business terms.  The pandemic put paid to “it’s technically impossible”, “you need the buzz of the trading floor”, “nobody’s going to do a billion dollar deal over Zoom” and “compliance won’t allow it” (in fact, bankers working from home have fewer breaches).  And so everything has fallen back to the last ditch argument; “we have to be in the office so that the juniors can learn”.

And that’s arguably true, in a sense.  The lesson that junior bankers often need to be taught is that banking’s an unpleasant and tiring job, that you have to do what you’re told and no amount of effort is too great or improvement too marginal if it could make the difference between winning and losing a deal.  Millennials and junior bankers hate coming into the office much more than their elders like having them there, but this is a feature, not a bug.  It weeds out the ones who are insufficiently prepared to suffer for the cause, and acts as a hazing process for those that are.

So although there are still some holdouts promising two remote days a week (mainly UK banks will a more retail-driven culture, or European ones with unions strong enough to hold management to past rash promises), the back-to-office movement is likely to continue.  As always, the way to forecast the future of organizational trends in investment banking is to start from the question “what would suck the most for employees?” and go on from there.

Elsewhere, another useful forecasting principle has always been “personnel is policy” – the idea that if you want to know what a bank wants to do, look at the kind of people it’s recruiting.  And apparently, this is even more true in the world of multistrategy hedge funds, where “personnel is performance”.

The “pod shops” charge “pass through” fees to investors for their operating costs rather than a fixed percentage of assets.  And they don’t have a single strategy to assess and backtest; their alpha generation is a weighted average of all the smaller franchises under their roof. What this means is that when asset allocators do due diligence on a multi-strat, their biggest concern is not the trades made, but the people making the trades.

As Allen Cheng of Aon puts it, “What you're really evaluating is their ability to retain and recruit people who are good at pulling the trigger.”  Or as one of his competitors says, “We’re all just comparing recruiting firms”.  It’s always been a commonplace in the financial industry that the most important assets leave the building every evening; for the multistrats, this is apparently literally true.

Meanwhile …

Hedge fund hotel” is slang for a stock with a lot of short-term speculative interest, but in Miami it’s going to be a real thing.  Citadel’s head office in “Wall Street South” is currently a temporary leased office building, but Ken Griffin has bought the site and commissioned plans for a waterfront head office which will have a luxury hotel on top of it. (WSJ)

Jane Fraser of Citi identifies the key reason for having removed so many co-heads and layers of management – there’s now “nowhere to hide” in terms of accountability for cost and revenue targets.  She also said the reorg was moving faster than expected, and that so far M&A and DCM revenues looked hopeful while ECM continued to be slow. (Bloomberg)

Apparently PwC has “strict rules” on the amount of electioneering that partners are allowed to carry out in its internal leadership contests, so that people aren’t distracted from their actual work.  Three senior partners in the US consulting business have stepped over the line and had their leadership roles taken away. (FT)

Meg Starr of Carlyle grew up in an off-grid home that her parents had built by hand, and seems to have taken roughly the same approach to putting together an ESG database for the private equity industry. (Bloomberg)

An ECB board member complained that the economists they recruit have to be “reprogrammed” to take account of climate change, and the staff are not happy. (FT)

Big Tech recruitment practices seem even more challenging than banking – as well as “take home assignments” which might include building an entire app, some employers are using the current state of the labour market to offer people jobs significantly more junior than the ones they applied for. (WIRED)

Manolo Falcó, former head of investment banking at Citi, now has “a clear mandate to spend a lot of time” talking to rich families in the Gulf region, because where the family office goes, the investment banking business of the family firm will follow. (Bloomberg)

 Have a confidential story, tip, or comment you’d like to share? Contact: sbutcher@efinancialcareers.com in the first instance. Whatsapp/Signal/Telegram also available (Telegram: @SarahButcher)

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AUTHORDaniel Davies Insider Comment

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