A lack of robust training during the pandemic has ‘slowed’ down Wall Street’s junior investment bankers, and some young analysts are asking whether this job is even for them
Reed Alexander, November 29, 2021
Two classes of first-year investment banking analysts have joined Wall Street since the pandemic upended the workplace.
Full-time analysts fresh out of college joined virtually in summer 2020. Undergrads with internship gigs between their junior and senior years saw shorter-than-normal summer programs in 2020 — and many got guaranteed return offers for full-time analyst jobs that would start the following year.
These younger cohorts of bankers have missed out on key on-the-job training and it’s proving tough to catch up. Insider talked to five junior and senior bankers, and three other experts on finance industry education, to learn where the pain points are and how firms are trying to address them.
Many tasks that junior bankers handle are straightforward, such as updating PowerPoint presentations and pitch decks. But some can demand an understanding of more sophisticated concepts, whether it’s analyzing equity or bond performance or partnering with research colleagues to synthesize market trends for clients’ benefit. On top of that, soft skills like effective communication can be hard to teach from afar.
“We’ve noticed that their first-year experience has not been commensurate to what others’ would have been had they been in the office last September,” one managing director at a middle-market investment bank told Insider, declining to be identified discussing matters pertaining to personnel.
“You learn not just by sitting behind a screen and being on Zoom calls, but actually being in closer proximity to the senior bankers in their offices, fielding calls from clients,” this person added, noting that one area where they’d seen juniors falling behind was in terms of skillful communication with coworkers.
It’s a tough time to feel like you’re behind. At most firms, it’s been all hands on deck due to an explosion in business. This year saw $5 trillion in global mergers and acquisitions as of mid-November, according to Refinitiv data.
Phil Colaco, CEO of Deloitte Corporate Finance, the investment-banking arm of the consulting giant, said that this year’s crop of juniors has faced setbacks.
“The fact that they didn’t have 10 weeks of in-person learning last summer I think maybe has slowed them down a bit,” Colaco said. His division, which advises on middle-market M&A, typically onboards about 20 analysts each year.
“I don’t think it’s impossible to learn how to do this job virtually, but I certainly think it’s going to be slower,” he added. “It would be very difficult to convince me that somebody sitting in an office with their peers, with their project teams, is not going to learn faster than somebody doing the exact same thing virtually.”
Wall Street leaders have been expressing concerns about training for months
Wall Street executives like Goldman Sachs CEO David Solomon and JPMorgan boss Jamie Dimon have disavowed remote work throughout the pandemic, citing an apprenticeship culture that’s hard to replicate virtually.
At Union Square Advisors, an independent tech-focused investment bank, partner Devon Ritch estimates that training time to onboard new first-year analysts has increased by up to 30% this year versus last. That includes a mix of formal internal sessions and training from an external provider, plus on-the-job training like brown bag lunches and mentorship.
Ritch said that Union Square Advisors introduced “office hours” during the pandemic, where senior bankers would set aside an hour every two weeks to chat with up-and-comers outside the confines of a live deal. The firm has continued the sessions as it’s gradually transitioned back to the office.
“Sometimes it just turns into retelling war stories to get them excited about the job overall,” Ritch said. “But a lot of times, it’s something that a junior person may just have wondered about on a deal and why something happened the way it did, and they can get my perspective.”
Some fear that a ‘stigma’ could form around the two most recent analyst classes
Last year, most investment banks reduced the length of their internships. Some like Morgan Stanley didn’t grant interns access to live deal work for compliance reasons regarding access to sensitive materials at home, according a person with knowledge of the bank’s 2020 policy.
Firms including Citi and Moelis offered their 2020 intern classes automatic return offers, before their summer training programs had begun, for 2021 full-time starts.
“I’m concerned that there’s going to be a stigma associated with these two years of analysts,” said Steve Sibley, a finance professor teaching the investment-banking workshop at Indiana University’s Kelley School of Business. His students go on to intern or work at a variety of firms ranging from Bank of America and Goldman Sachs to Guggenheim and Moelis.
He blamed that bias on a belief that, because interns “had light internships and a guaranteed return offer and didn’t have to sweat it out, that somehow they’re inferior.”
No matter how they arrived on Wall Street, the struggle of feeling unequipped for the job has been difficult for some juniors.
One bulge-bracket investment-banking analyst who started full-time this summer told Insider that he felt so underprepared for his job that he contemplated quitting on multiple occasions within the first few weeks.
Frequent criticism from his managing director and the associates with whom he worked most closely only compounded his anxiety. His parents came to New York City to take him to dinner on three occasions to calm him down, he added, speaking under the condition of anonymity.
External training providers have been beneficiaries of juniors’ need for extra education.
Scott Rostan, CEO of Training The Street, said his firm has witnessed record-level demands from its investment bank clientele this year. One client, which he did not specify by name, approached his company in the winter and said that a number of analysts had recently resigned, and had complained of inadequate training in their exit interviews.
Banks have come to view Training The Street’s refresher courses in core finance concepts like a “COVID booster shot,” Rostan said. Refresher courses covering advanced M&A transactions, leveraged buyouts, or reverse Morris trusts were among his firm’s most popular offerings for new analysts as of late, he added.