Wall Street banks handle the workload of their junior employees

If you're wondering whether long hours are really necessary in investment banking, then this probably isn't the career for you.

The stressful and rewarding business of closing deals and being on call for clients at top Wall Street banks is notoriously stressful. It is not uncommon for bank entry-level employees to work more than 100 hours per week.

However, some employers are re-examining whether they could and should do more to support their junior workforce, particularly by seeking to limit weekly working hours.

“There is a huge difference between 80, 100 and 120 hours,” said a former junior investment banker. “Nobody has a problem working 80 hours a week, even 90. (But) 100, you're tired, 120 is something you should do (at most) once or twice a month.”

Bank of America recently introduced a system for junior bankers to log their work hours daily instead of weekly, making it harder to underreport their workload. Now, if a junior banker works more than 80 hours a week, he will be monitored by the human resources department. Bankers also have a “protected day” every weekend.

JPMorgan Chase, the world's largest investment bank, has also capped the weekly working hours of junior bankers at 80 hours, although that limit does not apply when they work on live deals. It appointed a senior executive to oversee the junior banker program and focus on their welfare.

This introspection was sparked by the sudden death this year of Leo Lukenas III, a 35-year-old junior banker at BofA who had previously been a Green Beret in the U.S. Army. His death was believed to be due to a blood clot, but this raised new concerns about the long hours and working conditions of young bankers.

But questions remain about whether the caps will be enough to counter a culture of long hours that has grown over decades and that some supporters see as a rite of passage. Some industry officials have downplayed some workers' desire for change.

Peter Orszag, head of Wall Street bank Lazard, told Bloomberg last month that young bankers are happy to work long hours if they are involved in important and interesting work and this is balanced with flexible work arrangements.

Limiting young bankers' hours will reduce the amount of time they have to do their work, potentially increasing the need for more hiring in an industry where job losses ebb and flow with the amount of business activity.

“If you need more people to manage the 80-hour circuit breaker, are these the people who will be cut off? “I’m a little afraid of that,” said a junior banker at a major Wall Street bank.

Ultimately, those entering the industry realize that the industry is highly competitive—and well-paying: Investment banking offers one of the most lucrative paths for new graduates, with starting salaries of more than $100,000 and significant year-end bonuses.

“I've tried to discourage about a third of my students from getting into it because they lack the drive,” said David Stowell, who worked in investment banking for about two decades and now teaches at the Kellogg School of Management at Northwestern University .

“It's not for everyone. But for the right people, it’s a remarkable 30-year career, or at least a remarkable foundation.”

Concerns about long working hours and the well-being of young workers are not limited to banking. The legal industry is grappling with similar problems as pay for young lawyers has risen dramatically and some firms' ambitious targets of 2,000 billable hours per year have been criticized.

If customers are pushy, difficult to serve and set unreasonable deadlines, this will be passed on to the bankers

The issue came to the fore last year after a partner working 18 hours a day on a deal at UK-based law firm Pinsent Masons was killed by a train after falling onto a track amid an acute mental health crisis. Pinsent Masons says it has tested a tool that alerts the company to persistently long working hours. “Summer Fridays” were also offered – a compressed work week that allows employees to take Friday afternoons off during the summer in their country as long as their commitments are met.

Other law firms have named people to watch for red flags like late-night emails or missing holidays.

Likewise, this is not the first time the banking industry has considered workloads. More than a decade ago, there were calls for an overhaul of banking culture following the death of a BofA intern in London.

During the pandemic, a group of first-year investment banking analysts at Goldman sent the bank's management a presentation documenting their 95-hour weeks. That prompted Goldman to recommit to a “Saturday rule” that would ban junior bankers from working from 9 p.m. Friday until Sunday morning, a move many other banks have since followed.

But complaints about strenuous hours can conflict with the structural realities of investment banking, a business in which millions of dollars in fees are at stake on every pitch. With every transaction, the customer expects first-class service.

“Customers pay the bills,” Stowell said. “If customers are aggressive, difficult to deal with and set unreasonable deadlines, that gets passed on to the bankers.”

There is also some skepticism about the personal benefits that the new rules will bring. Several bankers said that they understood the mandate to have “at least” one day off a week to mean, for example, that they had to work the other six days.

Many industry veterans say working conditions have improved. Wall Street offices have also become much more tolerant of women and minorities.

The only thing that will save you are capable managers who know what they want and explain to you what you want. And they're hard to come by

But some senior bankers also believe the complaints from younger colleagues are overstated and reflect the sensibilities of a new generation that is not as battle-hardened as their own.

The problem often comes down to the quality of work that junior bankers receive. As Orszag noted, many are open to long hours if they feel like they're doing intellectually stimulating work and engaging with clients rather than, say, writing pitch documents.

“An example that always drove me crazy was when you saw that you were on version 35 of a PowerPoint presentation,” said David Erickson, an associate professor of finance at Columbia Business School who works at Barclays and Lehman Brothers worked. “They had teams of juniors (who stayed late) going through all of this material and revisions. And the senior people who are actually going to be at the meeting haven’t even looked at the document.”

Another problem is that some senior bankers don't view young employees' time as a cost to the bank, said Alex Edmans, a finance professor at London Business School who began his career at Morgan Stanley.

“If analysts counted the hours they spent on a single project and the department was charged a fee, that would be…” . . Make people think twice about hiring analysts to do work for unnecessary reasons,” he said.

Senior bankers talk about the need to work smarter, not harder, and say managers need to anticipate work as much as possible so that junior bankers aren't faced with impossible deadlines.

“I really think it's structural for the industry,” said a senior investment banker at a Wall Street firm. “The only thing that will save you is really capable (chief executives) who know what they want and articulate what you want. And those doctors are hard to come by.”

There was talk that new technologies, particularly artificial intelligence, could solve the problem by taking over lower-level work. But skeptics warn that AI may just mean there are fewer young investment bankers who still have to work just as hard.

“There have always been technological developments to enable investment bankers to do things more efficiently,” Edmans said. “But they’ve just been asked to do more.”