Wall Street’s Elite “Analysts” Programs

By Roy C. Smith and Charles J. Murphy

Andrew Sorkin’s June 2, 2015 article about the death of Sarvshreshth Gupta, a 22 year-old first-year analyst at Goldman Sachs has created a lot of buzz at NYU Stern where many undergraduates have long sought similar jobs as Wall Street analysts.

These jobs are very highly valued for the training, prestige and future opportunities they provide. They are widely sought by the best and the brightest and most competitive undergraduates from all over the world. They also pay very well (for 22 year-olds).

But, they do come with an expectation of 80-100 hour workweeks, and a total immersion in the firm that allows very little time for developing a “real life.” It has been this way since anyone can remember.

Part of the reason for this is the unpredictability of activity in capital markets, which includes prospecting for and executing new issues of securities, IPOs and mergers and acquisitions. This year’s activity level, for example, is considerably higher than last year’s; when activity levels surge it is “all hands on deck.” The work has to get done, something everyone knows and pitches in to help achieve as a team effort.  

Periodically there are quiet periods, which don’t get discussed much, though these too can be consumed by greater marketing efforts.

But another part of the reason for the high workload for young “analysts” (those with Bachelor degrees) and “associates” (MBA’s) is cultural. The firms believe that having a relatively small staff of high-grade junior employees to handle the business provides a more intense form of training that produces a cadre of highly professional mid level employees with long-term career potential.

Analyst positions originally were awarded with a two-tear contract, after which the individuals were expected to go back to school for a MBA. In recent years, the two-year contract has been replaced with an open-ended job offer with the understanding that some, but not all, of the analysts will be upgraded to associates.

The first two years at the elite firms is focused and intense to a degree that most twenty-somethings have never experienced. It is a tough, sink-or-swim process that separates out those that have the aptitude, personality and preference for this type of work that requires balancing the needs of several different deal-teams against moveable deadlines. It can be nerve-wracking and physically demanding; in some ways it is similar to the elite military training for Seals or Special Forces units.

It is tough, especially for foreign-born individuals to whom the high-pressure American work environment is completely alien, but that doesn’t mean people are expected to work themselves to death.

Of course the firms have a responsibility to provide some sort of watch over their young analysts to be sure they are not loaded down with more than they can be expected to deliver. Some sort of mentoring has to be part of the package with intervention from time to time to shift the work around to spread out when deliverables are due so they are not all due at once, a common nightmare.

Most of the firms recognize this and indeed have attempted to ease the pressure by hiring larger analyst classes, reducing weekend work and by offering counseling and other support services. Nevertheless much of the pressure on the analysts is self-induced and too often individuals struggling with their jobs are unwilling to seek help for fear of appearing weak or falling behind.

But the analysts themselves need to understand a few basics too.

First is the simple fact that the training is all about establishing a reputation for being professionally reliable, which means getting the work done accurately and on time, without pestering others with a lot of questions about how it is to be done. Reliable analysts get promoted, those that aren’t don’t.

Second, its about handling chaos and disorder.  Most analysts work on several deal-teams at once, the requirements for deadlines, meetings, etc. change from week to week, sometimes creating convergence or overloads on the system. It can certainly seem chaotic, but successful analysts learn to look ahead a week or two, prioritize and anticipate what has to be done, and plan accordingly. If conflicts emerge (you can’t be in two places at once), let your boss know well ahead of time, maybe suggesting an alternative way out. This also means that there are times when the analyst has to say he or she is too busy to take on a new assignment.

Third, a tough training environment is going to have to be endured before you can really judge whether or not the work (and the career) is what you want. The analyst programs are supposed to test endurance, but you probably won't really know whether this type of work is for you or not until you have completed the intended two-year training cycle. You can always decide to do something else later, but, for most people, the best advice is to stick it out.

There are many benefits to completing a two-year hitch as an analyst. Some then decide to seek MBAs or other graduate degrees with the expectation that their analyst experience will help them gain a coveted position as an associate in a top financial firm. Others may stay on, being promoted to associate without going back for an MBA. And many decide to go on to hedge funds, private equity firms or other non-financial destinations where they can establish the kind of work-life balance they want.

Mr. Gupta may have committed suicide, for reasons that may have been job related but could have involved other factors as well. He apparently did not adjust well to the job he had, and tragically, neither he, his family, nor his superiors at Goldman Sachs were able to recognize his distress and help him deal with it. It was a horrible misfortune that should result in closer attention to struggling analysts in the future.

But the overall success of the analyst programs at Goldman Sachs and other top firms in not in dispute. They produce very well trained and competent finance professionals that can go on to very rewarding work at their original firms or elsewhere.

Messrs Murphy and Smith are former investment bankers who are Professors of Finance at NYU Stern School of Business.