Why Do Our Best and Brightest Young People Want to Work on Wall Street?


The life of an entry-level Wall Street analyst is succinctly described by Kevin Roose in his new book, Young Money:

They made pitch books for clients who will never read them, and get yelled at for improperly aligning cells in Excel, all in hopes of a year-end bonus number that won't make them want to jump in front of the 4 train. They are the young investment bankers of Wall Street, and they just want some sleep.

Who, in their right minds, would even consider signing up for such an awful existence?

We know, of course, that many people would do just about anything for the opportunity to live that life. At Harvard in 2008, 28% of seniors who had jobs at graduation were headed to the financial services sector, according to Roose. At Princeton in 2006, the number was 46%. In 2013, as Wall Street continued to recover from the financial crisis, Goldman Sachs (NYSE: GS  ) received 17,000 applications for 350 summer internships. As Goldman President Gary Cohn confirmed, "We have no problem attracting people."

These are meaningful numbers, and Roose sets out to better understand them. In the introduction to his book, he says his aim is "to figure out who these people were, and how the crash was changing their initiation process." His approach is to follow eight entry-level analysts as they begin their careers at some of the top Wall Street financial institutions.

So, how awful are they?
One of the most striking things about the book is that the analysts are very likable, even though their Wall Street habitat is just as troubling as you might imagine. As the young bankers struggle with mundane tasks along with the bigger challenges of growing up, we witness a corporate culture that is unapologetically focused on money above all else.

To the question of "what motivates him," one senior Goldman Sachs managing director answered: "Making money. Making as much money for myself and the firm as possible." Roose's big fear is that his cohort of thoughtful analysts will ultimately be transformed into members of an insular elite that is obsessed with money and power.

There is good reason to be worried. In one of the most damning chapters in the book, Roose describes going undercover to a meeting of Kappa Beta Phi -- a secret fraternity of senior Wall Street leaders that dates back to the Great Depression. Each year, the organization -- which is made up of top executives from such firms as Morgan Stanley (NYSE: MS  ) , Citigroup (NYSE: C  ) , and Bank of America (NYSE: BAC  ) -- holds a black-tie dinner welcoming new members. Roose decided to sneak in so he could see what might happen to young Wall Streeters, if they were to make it eventually to the top of the greasy pole.

What we learn isn't pretty. The event consisted of a stream of sexist and homophobic remarks, along with jokes mocking poor people and belittling Wall Street's critics. And, of course, there was a lot of bragging by the industry leaders about their wealth and status.

Roose is disgusted by their desire to "laugh off the financial crisis in private, as if it were a long-forgotten lark." His ultimate takeaway from the event was that "it amounted to a gargantuan middle finger to Main Street."

So what is Roose's conclusion? Will his decent, hopeful group of analysts become corrupted by Wall Street values?

It could go either way
By the end of the book, they haven't been corrupted. Two of them, in fact, leave Wall Street to pursue jobs with technology start-ups. And several seek out lower-key jobs within the financial sector.

It should be mentioned, too, that there are many decent people on Wall Street who care about more than just making money, so there isn't necessarily an inevitable path from newbie to Kappa Beta Phi monster. And Roose notes that Wall Street is changing gradually. The industry has contracted somewhat and the rewards are getting smaller, for the most part. Perhaps fewer of our talented people will flock to Wall Street in the future, and will instead pursue those fields that will truly interest them.

The real lesson for me from this book is that we should try to encourage young people to choose careers that they are passionate about, without worrying too much about finances and other obstacles. If someone loves business and finance, then Wall Street might be an excellent choice. But if someone else really wants to be a doctor -- as is the case for one of the analysts in this book -- he or she should be supported in making that choice. Nowadays, the obscene price tag of a college degree and bleak employment prospects for new grads make the financial sector attractive to many who may not really want to go down that path.

Buy the book
Roose is an excellent writer and fine storyteller, who succeeds in making us wiser about an important but amorphous subject. This book will have wide appeal, and I even think folks like Goldman CEO Lloyd Blankfein and JPMorgan Chase (NYSE: JPM  ) CEO Jamie Dimon might find it useful for improving their corporate cultures.

One of my favorite persons in the book is a Yale undergraduate named Marina Keegan, who wrote a piece for her school paper about the Wall Street recruiting process. She wrote:

What bothers me is this idea of validation, of rationalization. The notion that some of us (regardless of what we tell ourselves) are doing this because we're not sure what else to do and it's easy to apply to and it will pay us decently and it will make us feel like we're still successful. I just haven't met anyone who is genuinely excited about these jobs. That's super depressing! I don't understand why no one is talking about it.

Inspired by Keegan, Kevin Roose is talking about it. Tragically, she died in a car crash a week after her graduation in May 2012. In a very moving concluding paragraph, Roose dedicates the book to her memory. As I reflect on Keegan's short, but meaningful life, I become very hopeful about the younger generation.


Read/Post Comments (6) | Recommend This Article (16)

Comments from our Foolish Readers

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  • Report this Comment On February 15, 2014, at 3:14 PM, gr8twhtebuffalo wrote:

    I've been in the mortgage industry for almost four years as a mortgage banker. I help people refinance their homes and in this business it's the same as what's portrayed in the post. Mortgage companies hire young people and train them to become 'mortgage professionals'. The only problem is you're not a mortgage professional in one year. It takes time to know who actually qualifies and who doesn't. I've been there and done that. I remember working from 7-am-7pm at my first mortgage company starting out and it was so stressful. What drives you is the money. I started making more money than most of the clients I helped. Not everyone can adapt to the ground; I'm fortunate enough to be good at what I do so I don't have to work 7am-7pm anymore.

    Even though money is my main motivation still....I do find reflief in helping someone save money in order to help their financial situation. Eventually I'll get out of the business but for now the money is too sweet.

  • Report this Comment On February 17, 2014, at 12:45 PM, miteycasey wrote:

    Do you really need to read a book to learn all this?

    Why are we having trouble getting US students into med school? because they can go to work in 6 years instead 12, work on Wall Street, and make 10x the money.

  • Report this Comment On February 18, 2014, at 9:15 AM, TMFBane wrote:

    I just wanted to note two related pieces of content that were published today by Kevin Roose.

    The first is an account of his attendance at the Kappa Beta Phi meeting:

    http://nymag.com/daily/intelligencer/2014/02/i-crashed-a-wal...

    And the second is the full membership list of the secret society:

    http://nym.ag/1fdtoLf

    "Young Money" is now available to readers today.

    Foolishly,

    John Reeves

  • Report this Comment On February 21, 2014, at 6:16 PM, kcisobderf wrote:

    It's two things. The money and other jobs requiring a similar cognitive load don't exist or a poorly paid.

    We have the wrong incentive structure in our Gordon Gekko society.

  • Report this Comment On February 21, 2014, at 7:14 PM, whyaduck1128 wrote:

    I don't have to buy a book to know why they gravitate to Wall Street--

    1. Money.

    2. The status that money can buy.

    3. More money.

    4. The things that money can buy.

    5. Even more money.

    6. The knowledge that they're not really qualified to do anything, no matter how many degrees they have from such high-profile, high-status universities.

    7. Even more money.

    8. The desire to hook up with equally soulless, rich people.

  • Report this Comment On February 22, 2014, at 3:52 PM, linmarman wrote:

    Interestingly, this same book was reviewed on NPR last Thurs (2/20/14)

    http://www.npr.org/blogs/money/2014/02/20/279737277/what-it-...

    They come to quite a different conclusion than this article. They believe the secret society party was close to the last of its kind. That of the eight recruits followed, three have already left to found their own companies and that only one remaining is happy with his job choice. The NPR story reports that Ivy League recruitment by bank & investment firms is way off, and poaching by tech firms of employees at banks is way up.

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