No country for old men

IFR 2021 22 February to 28 February 2014
6 min read

YOUNG MEN DRINK after work, old men dine. I guess that makes me an old man. However, it was not until I was dining out with a senior banker recently – a very fine meal in London’s Chinatown, no less – that I appreciated just how old we are. And I don’t necessarily mean in years. My friend is a long-standing fixture in one of the US investment banks who, now in his late forties, is feeling highly vulnerable to falling victim to the grim reaper of superannuation.

In the course of our long rant as to how markets have gone to the dogs since we first started out, how professional standards have fallen and how that fall led to both fun and profitability being legislated out of existence, my chum related a story that got me thinking.

One of his colleagues had created a sort of index and applied it to the trading floor. Imagine scoring an MD at five points, an SVP at four, a VP at three, an AVP at two and an associate at one and then looking at some of the desks around the office to see how the aggregated seniority of people working on them had changed. This, so he told me, had yielded some scary results as higher level staff has been whittled away and replaced, on an unaltered head-count, by more junior people. It would appear that across the platform in question experience is being been sacrificed on the altar of shareholder returns.

IN MY EXPERIENCE, crises are not exclusively brought on by the boffins who create new products but by inexperienced people selling them without either the knowledge or confidence to question the assertions of the people who put them on their desks.

Although the loss of experienced interlocutors is also often lamented by investing clients, the same fate is beginning to affect the buyside with the emergence of a generation that prefers, so it would seem, to correspond on a chat-line or by text message than to pick up the phone. Using automated trading platforms is all well and good but understanding markets is about finding out not only what is being done but why.

The information generation has lots of “what” and no “why”. In other words, no usable information. I was told of an operative on the execution desk of a major institution who tried to trade €20m of a corporate bond on a dealing platform a few days before Christmas and was outraged that not one single house showed him a price. “Earth calling, can you hear me?”

Alas, as my infernal but highly valued older sister would say: “It’s not better, it’s not worse, it’s just different.”

Perhaps my generation of bankers, the ones who have not yet retired due to excess wealth, are too busy trying to recreate the world in which they felt comfortable. Maybe the markets don’t need people with deep and founded knowledge and maybe trading bonds really has become more like clicking away at Flappy Bird than bidding and playing a hand of bridge.

Is it just the ageing generation of buyside clients that bemoans the absence of salespeople who cared to understand the customers’ business and wanted to be talked through a concept and would then execute the trade with the salesman who had “propped” the idea? None of that “best-ex” only malarkey.

Perhaps the time really has come for the likes of myself to shuffle off, stage left, and to leave the field open to those whose knowledge of the bond market is confined to what they can find on their Bloomberg and who will uncritically repeat what they have been told to say. In other words, should the market be left to people who are in essence just like we were 20 or 25 years ago? Why not?

Perhaps my generation of bankers are too busy trying to recreate the world in which they felt comfortable

FOR THOSE WHO don’t like it, buyside and sell-side alike, there is a thriving market for independent players in the boutique space. That is the world in which I live and thrive and where clients are happy to pay for service as long as it is supplied honestly and at not too high a price. The big firms might easily have lost their mojo and become, as the Coen brothers would have it, “no country for old men” but the rest of the world remains our oyster.

We’ve done the conferences, we’ve done the business class lounge to the extent that many of us had begun to breakfast more often in Terminal 5 at Heathrow than at home, we’ve done the mindless roadshows and the begging to get people to show up, we’ve collected the “pot orders” on new issues for sales credits worth less than air miles, we’ve smiled sweetly at disappointing bonuses. We’ve all been there and most of us never want to go back.

Business might be tough at the moment but at least I have nobody to justify myself to other than myself. I have learnt to leave the main battlefield to the youngsters. I just feel very sorry for the middle-aged “inbetweenies” who feel no more than tolerated in the investment banking space but who have not yet had the pleasure of bathing in the water of freedom. Come on in, it’s lovely and warm.