Mind the Gap | How investment banks reinvented social exclusion
Barriers to entry have never been more rigid and high in this self-perpetuating class structure
Here is an investment banking recruiting trick question that, pre-financial crisis, used to be lobbed by prospective employers at job interviews: “If you are offered a job at this bank would you choose remuneration based on commissions only or would you prefer to share in a bonus pool with your colleagues?” Only those candidates who chose commissions got hired.
That sounds shallow and you may think banks have become more humbled and egalitarian since the financial crisis. But recruitment practises continue to overwhelmingly favour candidates from elite educational backgrounds for client facing roles. These are critical roles where you have to manage relationships with rich individuals or senior corporate or government leaders.
A UK report entitled “Socio-Economic Diversity in Life Sciences and Investment Banking” by the Social Mobility Commission unveiled the hidden culture of bank recruitment. Unwritten rules mean you will be rejected if you wear brown shoes, appear uncomfortable in a suit or fail to exude a certain indescribable, but obvious “polish” or “aura”. Social exclusion and barriers have never been more rigid and high in this self-perpetuating class structure.
Caste systems evolve over centuries. They are illusionary and unfortunate prisons for each generation where forgetting to live by virtue is the greatest casualty of all. Most bankers think that apart from a few areas, financial services is a brutal meritocracy. Hard to get a job. Hard to keep a job. But, those few areas develop the future leaders of banks who can make or break our economies.
Whether you are in the US or UK, high level client service roles in banks attract a very narrow bandwidth of candidates. Preparing for a successful career in banking, hedge and private equity funds begins at a very early age in a child’s schooling. Besides top grades you’ll need to participate in Mother Theresa or Usain Bolt levels of extracurricular activities. At prep school you’ll major in pre-Ivy League studies and at an Ivy League college you major in pre-Morgan Stanley or pre-Goldman Sachs.
The Boston Consulting Group performed a study for the Sutton Trust which found: “It is interesting then to consider that in hedge funds and asset management 42 per cent of new entrants over the past three years had been educated privately. While in private equity the equivalent figure was 69 per cent.”