May 26, 2022

Ageism

There was a point in my life when I wanted a long career on Wall Street. Work until 65, get the gold watch, chase a white ball around.

It works out that way for precisely nobody.

Here’s what usually happens: Joe the sales trader has a long, productive career. He’s had long relationships with a pad of clients, he has great production, and he’s well-liked on the trading floor. Then suddenly, without any warning whatsoever, at age 47, he gets shot.

“Shot” is slang for getting fired. Now, the bank will usually frame this as a layoff or reduction in force. Then it will spread Joe’s accounts among the remaining sales traders and, eventually, hire a kid fresh out of college to take his spot.

Joe made $1 million a year, and the kid makes $135,000 a year. So, the bank saves $865,000 a year. The clients are upset, but they will get over it.

Joe is bewildered by this. He knows he was doing a good job. So, he thinks it won’t be too difficult to get a job at another bank. He talks to a headhunter, he exploits his contacts, he reaches out to people on LinkedIn. One month goes by. Two months. Six months. But Joe has nothing to show for his efforts. He’s knocked on every door. He’s called in every favor.

Joe is too old.

Joe becomes disillusioned. He’s not qualified to do anything in particular, other than handle orders in stocks or options or whatever. He’s smart and talented, and there’s a lot of things he could do, but nothing else pays $1 million a year. He could get a job selling insurance for $125,000 a year, but that wouldn’t even begin to cover his property taxes, homeowners insurance, HOA dues, college tuition, and everything else.

Joe is crestfallen. So, he goes down to the country club every day at 11am and starts drinking. Age 47, his life is over, and his best days are behind him.

Now, the really sad part about this story is the wasted human potential. You see, Joe has a lot to offer. He’s been working in markets since 1996, he’s been through a few complete cycles, he’s seen bull markets and bear markets, and he’s accumulated a lot of wisdom. He may not be as fast as the kid out of college, or as good at Microsoft Excel, but that insight is worth a lot. Or so you would think.

Apparently, it is valued at zero because this scenario plays out hundreds of times each year on Wall Street.

I don’t know a damn thing about employment law, and I don’t know if age discrimination is legal, but it is immoral. And the weird thing is it makes no economic sense for the banks, in a business where wisdom is more valuable than intelligence. Ever wonder why banks keep having these risk failures where they lose a billion dollars on a single trade? Why do they blow up over and over again? Joe would have been able to prevent something like that. He’s got street smarts, which are in short supply these days.

Look around a trading floor. Do you ever see anyone in their 60s? Do you ever see anyone in their 50s? 47 is the magic number. That’s when you suddenly become too expensive to keep around. 47 is pretty young. I’m 48. And I’m sure if I were working on a trading floor, I’d have a big bullseye on my back.

Sometimes, a guy like Joe will end up getting a job at a second-tier broker-dealer, then a third-tier broker-dealer, and then some bucket shop. It’s like getting spit out the bottom of the porn industry. In fact, there are quite a few broker-dealers that almost exclusively employ castoffs from the big banks. Those can be good places to work. But the pay is rarely the same.

Now, it is hard to conjure up a lot of sympathy for a guy who makes $1 million a year. I encourage you to try. It isn’t really about the money—it’s about having this thing you love suddenly taken away from you. It’s a bit like being a professional athlete. Outside of Tom Brady, not many athletes can play into their 40s. But that’s where the comparison ends, because in finance, you actually get smarter with age.

Wall Streeters do have one transferable skill—they are entrepreneurs. Being a trader or a sales trader means you have a P&L, revenues and expenses, and pretty much everyone on a trading floor knows how to run a business. Some of these people go on to start some pretty cool businesses, from restaurants to private equity firms. But some never escape the existential funk. So no, if you want to work on Wall Street, you will probably not have a long career. So, you better get while the getting is good and save as much as you can.

Music

Hey, I spent some time in the studio last weekend and came up with this brilliant mix. It’s called Cream. Check it out!

Jared Dillian

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