Monday, 21 May 2018

Never mind MBAs, we need more MBOs

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SwissInvest strategist Anthony Peters suggests more bond-trading pig farmers would be good for the banking industry

Anthony Peters, SwissInvest Strategist

BACK IN THE 1970s, I funded my way through university by working as an international tour guide. For an undergraduate, this was an incredible job – in one month at Easter and the four-month summer break I could rope in significantly more cash than the national average wage and, as we all still had free tuition and grants based on parental income, I lived the life of Riley.

Debt at the end of my course? You have to be joking: my surplus paid for me to spend a considerable period of time in the US earning nothing and I still had enough left over for the deposit on my first flat after I came back – despite the fact that I had my first “proper job” as a back-office clerk at the old Barclays International. Yes, I also started out checking confirmations and reconciling nostro accounts.

Recently, a young lady was interviewed on the radio. She complained that she had taken a university degree because, so she said, she had been promised that it would immediately give her access to a well-paid job in middle management. As she hadn’t found that job, she felt she had been deceived.

Really? I’m not sure what people expect of higher education but what is clear is that, although it might not open the doors you’d like it to, without it you don’t really stand a chance. But is this right and should we, as an industry, be quite so fussy? Do you really need a double first from Oxford and an MBA from Wharton to sell second-hand bonds to unsuspecting investors?

Do you really need a double first from Oxford and an MBA from Wharton to sell second-hand bonds to unsuspecting investors?

THERE IS A legendary old bond dog prowling the streets by the name of Colin. Col, now in his early 50s, has bought and sold more bonds, and switched and reversed more trades than most people have had hot dinners.

University? Forget that – Jesus College Uxbridge, reading gas meters, maybe. His story is a legend amongst the cognoscenti. He had left school and laboured on a pig farm where he overdid it a bit and seriously damaged his back.

While recovering from his injury and being limited in his capacity as an “MBO” – a muscle-bound oaf – a friend suggested that there were jobs in the back-offices in the City where it was warm, dry and where you got paid better than pig-farming.

He took the advice, came to the Square Mile and by the time he was 30 had become one of the most recognisable traders in the credit markets. If I want advice on the dynamics of a bond, I’d still rather ask Colin, the former MBO, than read a ream of research written by an MBA with a CFA.

Our industry, despite the propensity in the past decade or so to seek to hire only from the top institutions of higher education, is principally governed as a meritocracy, although to most outsiders and many insiders it probably appears to be more of a kleptocracy. We don’t care whether duke or dustman; if the candidate is good, then he will be hired – or he should be.

SADLY, OUR INSTITUTIONS are being run more and more by HR departments; identifying the basic skills which meant that a young man with a brain to trade could come and trade is being overlooked.

Thus it once occurred that when I chose to make offers to the best people I had had presented to me – a Swede and an Estonian, both male – I was asked by HR about my consideration for minorities. I wondered in reply whether, on a global basis, Caucasian males might not be counted as a minority.

Perhaps many of the problems which we are facing in the industry can be traced back to the fact that too many people entered it because it was the thing to do, because it was the place to make good money and not because they really wanted to be here or because they had a particular skill.

Perhaps even a little less excess brainpower wouldn’t do us too much harm either. The superstructure has evidently become too big for the foundations and taking a few floors off the top of the building will surely make it more stable.

I wonder whether the young lady who gave the interview ever asked herself whether, despite her degree, she was any good at anything other than passing exams. Would the City not be a happier place if we learnt how to ask the same question again, and would that not go a long way to resolving the authorities’ conundrum of how to get pig farmers onto trading desks?

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