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Junior Investment Bankers Unhappy With Paychecks, Direction Of Their Industry: Survey

Investment Bankers

First Posted: 08/25/11 07:49 PM ET Updated: 10/25/11 06:12 AM ET

As their industry shifts focus and work becomes ever more demanding, junior investment bankers are saying they're less satisfied with their jobs, according a new report.

The survey, which polled 2,000 associates and vice presidents within their first three years on the job, is just the latest sign that Wall Street employees may no longer find the world of finance as fulfilling as they once did.

In a poll conducted by the talent management firm Capstone Partnership, nearly 60 percent of junior investment bankers said they were planning to leave their investment banking jobs and move into private equity, according to Bloomberg. Sixty-seven percent of respondents said they were disappointed with their pay given how many hours they worked.

However, Rik Kopelan, managing partner at Capstone, told The Huffington Post that for many young investment bankers, the problem isn't money, but rather a "tremendous change" in the industry's priorities in recent years. Namely, investment banking has moved away from its roots as a consultative service and is now largely focused on accruing capital, he said.

The business is "less intellectually interesting" than it was 20 or 25 years ago, Kopelan said. Now, "it's more about shoveling money around than giving great advice."

Young bankers who got into the industry expecting to provide one kind of service are increasingly disappointed with the sector's emphasis on capital, which wasn't as much of a priority a generation ago, Kopelan said.

William Moore, a professor of finance at the Kenan-Flagler Business School at the University of North Carolina at Chapel Hill, told The Huffington Post that the focus for investment bankers has indeed shifted toward capital transactions, which tend to be much more lucrative than advisory services.

It's not uncommon, Moore said, for a bank to net over $100 million as a result of a capital transaction, and only $10 or $15 million in fees for advice.

"The game has changed a lot," he said. "The younger folks should know what they're going into."

Junior employees and other newcomers have had an especially precarious existence on Wall Street lately, with lower-paid, less-senior employees among those most affected by the layoffs rippling through the financial sector this year.

Meanwhile, as companies cut payrolls, Wall Street interns are increasingly expected to handle the same workloads as regular employees, with some firms hiring more interns this summer in anticipation of increased activity, The New York Times reported.

While Capstone provided The Huffington Post with a copy of its questionnaire, it would not provide the results of the survey, which Kopelan described as "privileged information."

The Capstone questionnaire asks respondents to choose from a list of possible reasons they would leave banking. Besides "disappointment with compensation," other reasons include "lifestyle/hours," "no future in Investment Banking as an industry," "increased government regulation/oversight," "less potential for personal wealth creation than in previous years" and "I don't see myself as a true business developer."

Overall, the financial industry is shedding personnel and seems unlikely to recover them.

The number of Americans who work in finance is at a 12-year low, Reuters recently reported, and further cuts in the payrolls of major companies are expected. Hiring has not bounced back since the financial crisis, and in the meantime, a number of former Wall Street employees have taken up new vocations.

Kopelan told The Huffington Post that he expects talented, innovative bankers increasingly to look for work elsewhere -- in business development, for example, or private equity -- and that the practice of investment banking "won't be recognizable within a few years."

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