Morning Coffee: The trouble with retiring young from a finance job. Deutsche Bank is primed for Monday
Leaving your finance job when you're still young(ish), and pursuing a life of leisure isn't easy. - Just ask Andrea Orcel who, aged 56, has more than enough to spend the rest of his life building sandcastles for his wife, daughter and infinite numbers of grandchildren, but is instead desperate to get back in the game and get the $113m he thinks he's owed for being out. Or take all the partners who 'retire' from Goldman Sachs and then reappear doing something different, like running the equities business at Deutsche Bank.
However, boredom, loss of status and a lack of inventiveness when it comes to sandcastle-building are only part of the issue for finance professionals in early retirement. There's also another problem, less-discussed: no one likes you.
Being idle when all around you are toiling is never going to be easy. But being idle when you made your money from an industry vilified for causing the financial crisis and perceived to have made life worse for many people, is like petrol to the fire of popular discontent. You're better off pretending you made your money selling body parts.
Ed Ditto was not a limb-seller. Nor does he seem to have run out of sandcastle ideas prematurely. Now aged 49, Ed retired from his commodity trading job aged just 36 and writes a blog called Early Retirement Dude, which keeps him busy but only earns him $1k a year. Ditto got out of finance long before the crisis, but still says it can be a bit awkward when people find he doesn't do anything. “I don’t bring up the fact that I don’t have a job,” he tells the Wall Street Journal. “If someone is interested, I’ll talk about it, but I don’t want to run the risk of stirring up resentment.”
Ditto is one of those FIRE (Financial Independence Retire Early) people, who spend their working lives spending as little as possible and then retire young and continue spending as little possible while telling everyone how it's done. Another FIRE person, Seattle lawyer Sylvia, tells the WSJ she saves 70% of her after-tax income and eats past-it fruit and vegetables discarded by local vegetable venders. She wants to retire at 40.
Given that most people in front office jobs on Wall Street are probably earning a lot more than Seattle Sylvia, intense parsimony while you're working could be the new ticket to a life after finance. Instead, a lot of young people in banking get into a cycle of earning and spending. Break that now. Read Henry Thoreau. Get used to eating shrivelled fruit and vegetables. And devise a credible alternative story for what you did while you were still employed.
“If I made twice the money, I don’t think anything would change. There is nothing I want that I don’t have,” says Sylvia, who treats herself with brown banana smoothies and $5 bottles of wine.
Separately, Bloomberg has done some digging into what's going on at Deutsche Bank and has found that the German bank does indeed plan to start informing its U.S. employees of their fates on Monday morning, presuming that its huge restructuring plan is approved during the board meeting on Sunday. It's a little late for DB people to start saving 70% of their after-tax incomes, but there's still time to embrace brown bananas and to hone a narrative in which a whole generation of senior Deutsche Bank staff made very large amounts of money before leaving to work for things like the SoftBank Vision Fund, while those who remained struggled in challenging markets as DB slowly fell apart.
BNP Paribas has no need of Asian equity researchers. It can just use Morningstar research instead. (Bloomberg)
An RBS trader who lost his job after investing in a film finance scheme which submitted false documentation to tax authorities has now lot his lawsuit attempting to recoup some money. “I am well aware that the consequences for him will be disastrous,” said the judge. (Bloomberg)
Brevan Howard has gained 9% this year, of which 4% happened just last month. (Financial Times)
Commerzbank is being allowed to appeal a sex discrimination case where a judge had ruled that the bank made, "stereotypical assumptions about women and about women taking maternity leave.” (Bloomberg)
Andreas Hauschild came to his Euribor trial with a leather bag full of stuff in case he went straight to prison. When he was acquitted he grabbed it, hugged his wife, and walked out with hand-in-hand to the afternoon sun. (Bloomberg)
Poker players make better traders because they know how to bide their time. (The Times)
The material palette at UBS's revamped old Swiss HQ, 'brings the heterogeneous rooms of the headquarter’s different building together. The new, timeless harmony of materials, contrasting between old and new reflects the brand values of the UBS, transforming their philosophy into an elegant physical space.' (DesignBoom)
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