Wall Street is famous as the world of Opportunities. Almost every one of us Knows about it. Many economics and finance students may have a dream to work here. But what are the negative things of Wall Street?
I’ll add another few points of Wall Street here:
A culture that encourages unscrupulous behaviour.
During the course of your financial career, you will find numerous instances where you will have to choose between acting ethically right vs. supporting your bank / / boss/department / etc. The choice might seem easy in this setting on Quora but when you have a full-on career and a family/lifestyle to support you will have no choice. This will make you wonder why you are doing what you are doing, and no amount of money will change this.
Lack of trust.
Because many people are acting unscrupulously, your colleagues will easily perceive you as unscrupulous too, even if you are not. This stress can also be disheartening and makes you a slightly darker person.
-advertisement-
Eat or be eaten.
It is an eat-or-be-eaten mentality, and you’d better be comfortable with being called out in a public setting for not dotting I’s or crossing ts. If you are a highly-detailed person who enjoys finding these errors, you may enjoy it, but most people don’t.
Politics.
Every company/industry has politics, but the amount of bull you have to put up with in meetings in finance seems over the top. There are many good people that work in finance, but the noose is tightening over the industry now, and knowing the right people is ever more important in saving your job, so politics is more prevalent than other.
No innovation.
For better or worse, finance is not an industry that prides itself in being terribly innovative. Don’t get me wrong, there are certain groups that work on innovative structuring/products/services, but by and large, it’s a small % of the industry that is working on this stuff. Your managers don’t value creativity, and after several years of working in it, you won’t either.
What People says, Who have worked in Wall Street:
Tom Groves, More than 40 years of experience at Wall Street
I’ve been thinking about how to answer this question for a few days now because it’s an interesting question and I wanted to get it right.
I don’t want to give you a laundry list of issues that can make the job not-very-fun. Others can and have done so already and they’ve given perfectly reasonable answers. But every job has good points and bad points and I’m not in the mood to whine. So I’m going to discuss the single thing that caused me the most mental anguish over my career. And that is
How do you behave when your personal interests are not well aligned with the interests of your employer and society in general?
Everyone faces this problem. If you’re calling in for a sick day because you were out drinking the previous evening you’re putting your own personal interests first.
But on Wall Street, the problem is about as extreme as it can be because the quickest and most effective way to become rich on Wall St is to exploit every opportunity to maximise your own interests. If you’re a trader, as I was, you should take on far more risk than is socially optimal because you’re the one who gets the upside of the big bonus and the bank you work for takes the downside of the losses.
And of course, in (very) extreme cases, as we’ve seen, that effect can spill over…
I don’t know how much responsibility I am supposed to take for other people’s interests. I feel like I should be trying to do the right thing for society, even if that’s not always in my own self-interest. But clearly, everyone has different values, both within finance and outside. I’ve worked with guys who were essentially the rational perfect bonus-maximisers that I thought only existed in economic theory. You give them a way to exploit a system and they will do it without a second thought. I can’t bring myself to do that. My conscience won’t let me. I’ve even talked clients (who were professional investors) out of doing trades with me that would’ve been very profitable for me because it was so clear that they simply didn’t understand what they were doing.
But every time I did something like that, every time I reduced my risk, every time I covered a downside that I knew wouldn’t be relevant come bonus time I knew I was screwing myself.
So that was the internal battle I faced every day. Did I want to be rich enough to do things that I thought were “the wrong” things to do? Can you resist that temptation when you’re watching a guy next to you make a fortune doing “stupid” stuff? Do you even have a responsibility to try or are we living in an every-man-for-himself world? People might think these moral choices are easy. They are not. The situations are complex and you’re being pulled in many different directions. Most of the time it’s virtually impossible to understand what the true risks you’re taking are, let alone judge whether it’s in the wider interest for you to be taking them. The choices are hard.
It’s easy to do the “right thing” when you’re going to go home at the end of the day with your salary regardless. It’s a lot harder to do the “right thing” when millions of dollars are on the line. Working on Wall Street can put you in a position where you’ll drive yourself crazy trying to work out what the “right thing” is. And that was the most negative thing about it for me.
I’m disappointed by this answer. I don’t feel that I’ve managed to get my true feelings about the subject over, despite all the effort I’ve put in. And it’s way too long. And not very funny. Who wants to read a whiny unfunny overly-long diatribe about working in finance? You probably came here looking for something like “you might have 8 other people sitting within 6 feet of you and at least one of them won’t be focusing on his personal hygiene” anyway. So I’ll leave you with that thought.
David Friedman, He has had a career or two.
Oh, lots. And there’s lots of good about it too. But since you asked about the negatives:
A lot of pressure to excel and generate alpha (if you’re a trader) or large fees (if you’re an investment banker)
- Some co-workers will be very bright and others will just barely hang on. But the ones who barely hang on play the political game very, very, very well, and a lot of their deficiencies are papered over. At least until the market craters.
- Technology is often outdated, corporate-controlled, hierarchical, inflexible, subject to regulatory thickets, closed source, proprietary, and difficult to use. Your co-workers won’t have a clue what you’re talking about when you say this. (For certain proprietary trading shops, e.g., Two Sigma, etc. this is very much not the case. I’m referring here to traditional investment banks.)
- From what I hear from people who still work at the big banks, you’re inundated with paperwork, bureaucracy, regulatory appeasement, etc.
- Job tenure is uncertain. Though this is true of many other industries, too, the volatility (and potential compensation!) is greater on Wall Street.
- At least early in your career, you come across extreme personalities that thrive on high stimulation 24-7 and, if you get sucked into that lifestyle, will age very quickly, burn out even more quickly, and create lots of health problems for yourself. I used to know a bond trader from the ’80s who personified its partying atmosphere. He died of liver cancer in his late 50s but he made a shit load of money. You don’t want to be that guy. That kind of party is not as prevalent today as it was 25 or 30 years ago, but it still exists in pockets, and if you’re prone to get sucked into that lifestyle, watch out. “Models and bottles” is a pretty awful lifestyle. Thankfully that was never my thing.
Michael Feng, 9 years in i-banking, 5 years (and counting) in tech
What’s not a negative (compared to tech startups since it’s my only other benchmark):
- Long hours: The hours are fairly comparable to a startup. This is because the perception of banking hours are skewed by 100+ hour week horror stories. The average is much lower. Groups on the trading floor have better hours. On the other hand, life is busy at a tech startup and you’ll need to work from home in these always-on, Slack-field days.
- People and politics: It’s pretty similar. Most are hard-working, bright individuals. You won’t get along with everyone, but you can make life-long friends as well.
What are the negatives:
- Intrinsic motivation: I found it hard to care personally about success when I worked in banking. Helping companies raise capital and accumulate assets just wasn’t that appealing (granted, my companies were shell companies in the Cayman Islands!). Extrinsic motivation in the form of the year-end bonus was a great motivator, but for me, it wasn’t very sustainable on a day-to-day basis.
- Unprofessional banker syndrome: This really sneaks up on you. In retrospect, it’s a combination of the exorbitant salary + bonus, along with the mob mentality of money-fueled bragging and superiority complexes that are pervasive in banking. I only realized this when my wife referenced examples of how much of an asshole I was when we first met.
Tim Lantz, a Software developer in financial technology.
For me, it would be commuting downtown to get to work.
It is crowded on the train and Lower Manhattan sort of feels like a Batman movie. It’s cool to visit once in a while. But I think it would be challenging to go there every day.
To mitigate this negative work in finance but in Midtown or somewhere else in the city.
On working in finance in general: it’s a huge industry. There is a wide spectrum of job types and company cultures “on the street” (I don’t mean in a geographic way now). The negatives for any particular person/company pair are going to vary. But there will always be negatives.
One approach: try to find people you want to work with every day. People you’ll learn from. Look for mentors who will teach you to influence change. Join them. There will be negatives that you identify right away. Work hard and learn to change them. Keep changing them until all the negatives are gone.