Morning Coffee: 22 year-olds shun Big Four jobs with dubious effort-reward ratio. The other method of cutting costs at Goldman
Since the scandal of the Goldman Sachs' analyst presentation on 120 hour weeks during the financial crisis, everyone knows that junior bankers work hard. However, there's also an appreciation that they are paid hard, even if banking pay has softened of late.
In the Big Four, however, people are worked hard and are paid comparatively modestly. And this realization is starting to cause problems.
The Wall Street Journal reports that accountancy firms have a shortage of staff because young people are shunning accounting careers. Accounting suffers a 'stigma that it is uncool, with tedious work and daunting hours' suggests one recruiter. A 22 year-old accounting major tells the WSJ he's "a little scared" of the 70-80 hour weeks and might go into the military instead.
For the Big Four, which hire thousands of students every year and train them up in the awareness that thousands will leave again, this is becoming an issue. KPMG has given its staff three successive pay increases. A positive narrative is being spun around the "incredible, powerful tool" that is the accounting degree. Tuition is being paid.
Nonetheless, the WSJ spies junior accounting roles in New York City being advertised for between $71k and $82k, which is considerably less than the $100k-$110k salary plus bonus on offer in banking.
US accountants aren't the only ones with issues. Last month, it became apparent that junior accountants in Spain have also been complaining. "When you sign, you think you're the Wolf of Wall Street," one told the Financial Times. "But when they come to university, they don't inform you that you'll have 14-hour work days and sometimes there won't be enough time to eat."
Separately, while Goldman Sachs embarks on a campaign to recover the mojo lost to its retail banking adventure, the firm is cutting costs. Yesterday we reported that it was slowing hiring. Today we inform you that it's also slowing travelling.
The Financial Times reports that Goldman's cost savings include a ban on travel unless it's approved by one of the firm's partners. However, partners themselves appear able to sign off their own travel and were therefore able to go to the firm's partner event in Miami, where CEO David Solomon reportedly told them that they must "go out and meet aggressively with their clients this year.”
Meanwhile....
Little-known hedge fund manager Said Haidar of Haidar Capital Management earned $859m in 2022 after anticipating rate hikes. He was the sixth highest earning hedge fund manager (behind Ken Griffin, Steve Cohen, Izzy Englander, Jim Simons and David Shaw) as a result. (Bloomberg)
Ray Dalio only agreed to surrender control over all key decisions at Bridgewater if the firm agreed to give him what could amount to billions of dollars in regular payouts over the coming years through a special class of stock. At one point, he allegedly told Bridgewater staff they would have to buy his shares with their own money. (New York Times)
Daniel Siefert, Coinbase's European CEO, says the club is 'doubling down' in Europe but not hiring yet. (Financial News)
Chelsea football club has found away around the financial fair play rules which say that 90% of annual revenue is allowed be spent on transfers and wages, dropping to 70% by 2025. Instead of booking the cost of buying a player this year, it's spreading the cost over multiple years. (Bloomberg)
56 year-old ex-JPMorgan banker Frederic Marino has been sentenced to 7.5 years in jail for defrauding the Libyan government, but he's on the run and no one knows where he is. (Bloomberg)
Federal Reserve Chair Jerome Powell earns $190k. This is the same as an associate in a bank but he says it's fair. (Bloomberg)
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