Investment banking firing will begin right after Thanksgiving.  Are you ready?

When I was at Merrill Lynch in 1999, I saw a colleague get fired 4 days before Christmas.  Cold, heartless, and crude.  That is precisely why, this year, the bloodletting will soon start.  The more the world changes, the more it stays the same.

Historically, December is the month when it begins.  Look at the markets from 1973, 1987, 2001, etc. and you will see clear trends.

However, if you keep reading and don’t skip ahead, you will learn 3 tactics to prepare yourself!  If you skip ahead, this article will self-destruct.

Ron’s Story

Investment Banking Firing

My colleague Ron was an underperformer at Credit Suisse in 2001.  He had pissed off our head trader, came in much later than was acceptable, and was not as technical as he could have been.  He came into my office on “bullet day” and asked me why he was being called into our MD’s office.

I knew but couldn’t say or was too scared to say.  When the conversation was over, Ron came back to me with shock in his eyes.  He had no clue.  He was sincerely shocked.  Nobody else in our department was, however.

Have you ever seen a grown man cry in the office after taking a bullet?  I have many times.

The ego fools you
Investment Banking Firing


It has been my personal experience that layoffs are so painful because the ones laid off are precisely the ones that don’t think it will happen to them.

The ego does not let you think clearly.  You wrap yourself up in a tight ball of protection and look for ways to convince yourself why the firm can’t let you go.  You say to yourself “I’m the only one who has this or that”, “The client needs me, etc.”

Your view is micro.  The problem is layoffs are macro.

For most industries

Quite a strange thing is happening in the job market across the country.  Unless you work in BigTech or crypto, the job market is really strong.

For those of us seasoned enough to have gone through many ups and downs, this makes no sense.  Rates are heading up, a recession is looming, and geopolitical risk is high.

From my discussion with pros across many industries, the only logical answer that makes any sense can be found in the following quote from an executive at a mid-sized firm:

“We had such as hard time finding professionals during COVID, that we would rather keep excess personnel on hand than fire them and go through the pain again to re-hire.  That could change in time, though.”

However, investment banking is a different beast
Investment Banking Firing


Let’s turn to financial services.  Investment banking firms all have payroll as their biggest expense.  My premise is that they can’t afford to keep their pros given quarterly their earnings pressure.  The business is a boom/bust business by definition.  Long-term planning is bullshit.

They will let professionals go since investment banking won’t need to compete with BigTech if you need to get them back.  It’s all about cross-markets.  The brain drain to BigTech is over.

The brain drain to Fintech has also slowed considerably.  Gone is the day you join a Fintech with an IPO takeout in 1-2 years and earn massive rewards.  Rewards are there, but the time horizon is a lot longer.

Therefore, if you examine Goldman Sachs, Morgan Stanly, or JP morgan’s most recent quarterly earnings, except for fixed income trading, revenue was down 40% or more.  Wall Street’s biggest expense is payroll and the easiest to curtail.

Recently, Hugh Son wrote an excellent article for CNBC titled “Wall Street layoffs likely ahead as two-year hiring boom turns to bust”. He states that headcount at JPMorgan’s investment bank, Goldman Sachs, and Morgan Stanley jumped by 13%, 17% and 26%, respectively, in the past two years amid a hiring binge.

Think about it, if the business is way down and the headcount is way up, how can that not end in disaster? Investment banking firing will start soon.

In recent news, Goldman just reinstated their 5% mandatory annual culling.  From my private conversations with pros at the largest investment banks, layoffs have slowly started.  Investment Banking is out of practice in firings and termination laws are constantly evolving.  Start small and go big.

Why wait until the end of the year?  The cold hard reality is why fire someone before you have gotten a full year’s worth of work from them?

What can you do now?

You may not know where you fall on the “list.” Don’t fool yourself, everyone is on the list, just a question of position.  Mark my words, “investment banking firing will begin soon”. Here are 3 quick tips:

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