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If you want to make money in finance, you are probably pursuing ‘alpha.’ But alpha generation is not easy: it requires time series forecasting. It also requires that your (hopefully good) forecasts are turned into profits – and this is where things can get complicated.

When you work on the buy-side in finance, you can realize alpha either by placing orders and trading (aggressing) or by slightly modifying – skewing – the prices that you are quoting to others (known as passive risk management, as opposed to aggressive trading). In each case you leak some information about your forecast to the market – and therefore interact with the very object that you are trying to predict.

This interaction will be key to the application of machine learning in finance. Will the intereraction have no effect? Will it help realise your “prophecy” (in which case it is a self-fulfilling prophecy)? Or will it thwart it (in which case it is a self-defeating prophecy, both terms having been coined by Robert K. Merton, the father of Robert C. Merton of the Black-Scholes-Merton fame)?

Cybernetic systems and the trading floor

Trading strategies are prime examples of cybernetic systems. Norbert Wiener introduced cybernetics in 1948 as “the scientific study of control and communication in the animal and the machine”. The word originates from the Greek kubernetes, “steersman” via the 1830s French term cybernétique, “the art of governing”.

Wiener understood the importance of message-driven systems. In The Human Use of Human Beings he wrote: “Messages are themselves a form of pattern and organization. Indeed, it is possible to treat sets of messages as having an entropy like sets of states of the external world. Just as entropy is a measure of disorganization, the information carried by a set of messages is a message of organization… It is possible to interpret the information carried by a message as essentially the negative of its entropy, and the negative logarithm of its probability. That is, the more probable the message, the less information it gives. Clichés, for example, are less illuminating than great poems.”

In cybernetics we are considering the inputs and outputs of a particular system over time, possibly in the presence of feedbacks, which can be positive or negative. We are using the inputs to predict – and hopefully control – the outputs. Cyberneticians postulate: what you can measure, you can (sometimes) forecast; what you can forecast, you can (sometimes) manage; and what you can manage, you can (sometimes) prevent.

In cybernetic systems traders are trying to realise gains and avoid losses in markets where the input time series is used to forecast an output time series in the presence of feed back.

Why applying AI on the trading floor isn’t easy

It’s not easy to generate alpha as a trader – financial time series are notoriously difficult to deal with. They are non-stationary (their statistical properties change over time), non-Gaussian (often skewed and exhibiting fat tails, making extreme events far more likely than they normally would be), influenced by animal spirits (which Keynes defined as “a spontaneous urge to action rather than inaction” – a property of the human soul), driven by unobservables (or latent variables, such as volatility), affected by human errors (including fat-finger errors), complex and interrelated, often multivariate and high-frequency (consisting of numerous intraday observations arriving at irregular time intervals).

Most of the successes in artificial intelligence (AI) so far have been achieved with images and natural languages. However, financial time series are far more challenging, and so applying AI in finance can be struggle.

Cybernetics suffered from the same issues as AI in the 1970s, 1980s, and 1990s. It was explored first and foremost by academics, rather than by engineers or entrepreneurs. It never became a technology, which Stephen Boyd defines at something that “can be reliably used by many people who do not know, and do not need to know, the details.” The computing power accessible in Wiener’s time was insufficient; the MIT Autocorrelator used by Wiener, Jerome B. Wiesner, and Yuk W. Lee was way off the modern Moore’s Law charts. It didn’t help that the mathematical technique for replicating the system – stochastic analysis – is complex and labour-intensive, and better-suited to parsimonious models with few parameters. There was no straightforward way to represent a system with anything but the most trivial feedback loops in software.

The technology available to us today is far more powerful. Message-driven processing, event-driven architectures (EDA), let alone reactive programming, were unheard of in Wiener’s times. Today’s technologies mean we can move on from mere cybernetics to neocybernetics. We can turn cybernetics into a technology by using it to create user-friendly processes, algorithms, software libraries and end-user products. We can use high-performance computing (HPC) technology, including cloud computing and potentially, going forward, quantum computing. We can complement stochastic analysis with the simpler mathematical language of deep learning and deep reinforcement learning, which rely on simpler probabilistic ideas to express uncertainty. We can use novel software engineering methodologies, such as the modified Functional Reactive Programming (FRP) incorporating transactions and making a clear expression of feedbacks possible.

We now have the new mathematics that makes neocybernetics accessible; programming languages, such as Python, that simplify the process of data science; numerous libraries for dealing with time series data, such as NumPy, SciPy, Scikit-Learn, Matplotlib, and Pandas; FRP libraries, such as ReactiveX and Sodium; special-purpose databases, such as kdb+/q, suitable for capturing, storing and processing vast amounts of data in real-time; and, using TensorFlow and Keras, more or less any data scientist can calibrate a fairly sophisticated neural net.

Kolmogorov and Wiener both recognised that cybernetics would lead to a different view of human beings and a different appreciation of human life – a new anthropology. Something that Master Yoda summarised as “Luminous beings are we, not this crude matter”. Wiener stated, in The Human Use of Human Beings, that the goal of cybernetics is the age-old struggle of humanity against entropy: “In control and communication we are always fighting nature’s tendency to degrade the organized and to destroy the meaningful; the tendency, as Gibbs has shown us, for entropy to increase.”

It turns out that alpha-generating traders are very well positioned to help out in this quest.

Paul Bilokon is a founder of The Thalesians. The Thalesians are an Artificial Intelligence (AI) company specialising in neocybernetics, digitaleconomy, quantitative finance, education, and consulting. The are experts in (and run courses in) the application of Machine Learning (ML) techniques to time series data, particularly Big Data and high-frequency data. Our areas of expertise also include the mathematics of ML, Deep Learning (DL), Python, and kdb+/q. A former quant and algorithmic trader at Deutsche Bank, Citi and Nomura, Paul also lectures part time at Imperial College London.

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Most of the time, personnel moves in investment banking are a fairly staid game of chess; one player moves at a time, looking for more money or seniority and each bank tries to build up its franchise piece by piece. Every now and then, though, somebody knocks the board off the table by coming in and taking out a whole team. The “team move” will always set off the industry gossip, as the hiring bank reveals itself to have a budget to match its ambitions, while the other employer involved now has to shore up its franchise quickly, and probably pay a premium to do so.

It’s a ticklish subject to talk about, because team moves are a grey area in legal terms. There’s no such thing as indentured servitude in modern capital markets: anyone can change employers for any reason that they like. But while you’re working for one employer, you generally owe that employer some duties of diligence and service, and one of those duties is that you shouldn’t be inducing your fellow employees to resign and go somewhere else. Not only would that be a breach of contract, but there would potentially be a liability for the new employer for enticing you to breach your contract. This means that every team move needs to keep enough legal pretence that it’s simply a series of five or six unrelated individual moves. And it makes the organisation of the whole thing entertainingly cloak-and-dagger.

The one team move that I was involved in began around this time of year. It basically came about – and resulted in the transfer of a franchise worth about $6m of salaries and maybe five times that in revenues – because somebody forgot to write a thank-you letter.

Just before Christmas, we carried out the biggest deal in recent history in our sector, at a time when our employer really needed some good news. We were waiting for the “well done” round-robin email that the head of division always sent around, but it never came. We started feeling a little bit unloved, and picked up rumours that the head was a bit jealous and thought we were getting above ourselves. Bad luck that this happened to be the case when the team leader caught up for dinner with an old friend from a different bank.

As Christmas was approaching, there was nothing particularly remarkable in the fact that the team lead went out for an individual lunch with all the members, one by one over the course of a fortnight. But those of us back in the office started noticing that the people coming back from the lunches did so with great big smiles on their faces and kept avoiding each other’s glance. If you’re any good in this industry, you notice what’s going on around you. I knew that something was up, but I didn’t know what.

When it came to be my turn for lunch, there weren’t many new details to be given. Just … show up at this restaurant, at this time. And trust the boss. He explained something about the industry to me that I hadn’t previously understood.

“It’s a common fallacy on this team”, he said over his mineral water “that we work for [a big bank]. In fact, we work for a small syndicate, led by me and composed of me plus you lot. The bank just provides us with office space, computers and the equivalent of a billing system so that our clients can pay us. And they take a proportion of our revenue for doing so. If we get a better quote for those services …”

Well, we did. On arriving at the restaurant, each one of us got whisked into a side-room, handed an envelope and then showed to a back door and told to leave quickly so that we didn’t bump into anyone we recognised on the way. After we had all got home and read our envelopes, the trap was set.

We resigned in order of seniority, which meant I was second last. And which, unfortunately for me, meant that by the time I walked into the head of division’s office, he was aware of what was in the process of happening. Possibly some of the other guys had been offered more money to stay – I’m certain that our team leader’s sidekick got offered the top job. By the time the food chain had stretched down to my level, though, all that was on offer was grumpy looks and fairly blunt threats of legal action.

That was the time that very much tested my nerve. We had our instructions – don’t say anything, don’t get drawn into a discussion of what anyone else has done, definitely don’t say which bank has hired us and keep it all as short as possible. Our new friend the employment lawyer had told us all that most of these threats are just bluster, and so it proved to be; banks generally don’t want to start a precedent by suing each other for poaching staff, because everyone does it and it’s never a good idea to wash the industry’s dirty linen in public. So with very bad grace, I said my goodbyes, handed in my card and went down to a pub far away from the City, to celebrate with half a dozen people who had coincidentally made exactly the same decision as me that day.

It wasn’t my most stressful job move – someday I’ll tell you about the bank that locked me in a room for six hours, and how I had to escape while pretending to go to the canteen. But it was the most exciting one. If your boss starts giving meaningful looks around the coffee machine early in the New Year, enjoy the ride.

Toby Browning is a pseudonym

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If you want to work in the investment industry in the United States, you’ll likely need to pass the General Securities Representative Exam, known most commonly as the Series 7. While the annual pass rate lands well above that of the CFA exam, only 65% successfully make it through the Series 7 on their first time, so the pressure is on. Without it, you can’t sell securities.

We spoke to Brian Marks, managing director of New York-based FINRA Licensing Exam preparation firm, Knopman Marks Financial Training, on what it takes to pass the Series 7 and other lesser-known financial exams.

1. Put the time in

While each level of the CFA requires a minimum of 300 hours of study, the recommended prep time for the Series 7 exam – assuming you’re new to the industry – is 80-100 hours. This should mean not only consuming the relevant study material, but undertaking at least 1,000 practice questions and taking live exams so you can gain an understanding of the pressure you’ll be under on the day.

2. Think concepts, not questions

A common mistake made by test takers is memorizing answers rather than digesting the actual material, Marks said. It provides a false sense of confidence and is a formula for not passing. When you simply pair questions and answers, wording and delivery can change, and you’ll need to be flexible enough to adapt. “People try brute force to memorize formulas rather than understanding the concepts. If your memory fails on the exam, there is no backup,” he says.

3. Don’t waste time on the technical subjects

In the Series 7, a lot of candidates are guilty of spending way too much time on the options and corporate bonds sectors. “These two topics account for about 20% of the exam,” says Marks. “The old story about the Series 7 was that options and municipal bonds used to make up close to 50% of the test – that was your parent’s Series 7, but that’s not the case anymore. There’s more variety and more emphasis on clients and constructing portfolios for them. There’s a trend towards testing practical knowledge to ensure that people are well equipped to meet clients’ investment needs.”

4. Know the bell curve rule

There are two facts to consider when you’re pondering how much time to spend on each question. First, there are 260 questions in the Series 7 exams but only 250 count. The remaining 10 are experimental questions used by FINRA to help improve the test in the future. So, don’t freak out if you see a question on an unfamiliar topic; this can put you off other questions. Second, there’s a bell curve approach to the exam. The first and last 25 questions are the easiest, so don’t panic if it suddenly gets more difficult.

5. Train for what you’re getting yourself into

The Series 7 exam is six hours long. It’s a beast. There’s a reason you need to immerse yourself into practice exams rather than simply bite-sized study chunks. You need to train like an athlete to get your mind and body used to this marathon period of time.

6. Make sure your study material is up-to-date

This sounds like a small thing, but out-of-date study material means that you’ve pretty much missed the boat. This is particularly the case as regulators change the rules ever more swiftly. The study material you use must be less than a year old.

“Keep an eye out for crowd-funding questions, which may come up,” Marks said. “FINRA will also heavily weight questions on topics that have been the subject of abuses by industry personnel. Examples include variable annuity sales to senior citizens and sales of structured products to less sophisticated investors,” he adds.

FINRA constantly updates the Series 7 content outline. One premium topic is making suitable investment recommendations. “There’s a major trend toward the suitability of investments on the examination,” says Marks. “It’s not so much about rote memorization as it is knowing how particular clients would want to construct a portfolio and knowing what types of products would be appropriate for them.

“For example, zero coupon bonds might be appropriate for someone looking to save for their children’s college tuition, money market funds are good for a client seeking liquidity, while structured products such as equity-linked notes, sophisticated products with leverage, are likely appropriate only for institutional investors with a detailed understanding of how they work,” he adds.

7. Go above and beyond

You need 72% to pass the Series 7 exam, but confidence is key. Realistically, you need to be hitting 80% in the practice exams to go into the day knowing you can pass. The bigger the margin for error, the better.

Follow @BeecherTuttle

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It’s 2019. As banking professionals in Asia start preparing to search for new roles in the new year, an increasing number of them are also contemplating more fundamental career changes.

Recruiters in Singapore and Hong Kong say they have noticed an uptick in candidates contacting them about shifting into new parts of the banking sector. This is, of course, far from straightforward – and is only possible in a limited range of job functions. If you’re thinking of making a major job move yourself, these are the sectors where you’re most likely to succeed.

Infrastructure engineering into cyber security

Cyber security specialists are in high demand in Singapore as banks expand their digital platforms while tackling the growing threat of attacks targeting the Republic. But banks in Singapore aren’t just filling their ranks by poaching from rivals. They’re also encouraging staff from other functions, especially junior to mid-level infrastructure engineers, to move internally into cyber security roles. “Cyber security operations is the easiest route into cyber security, and it’s also the role most open to infra engineers,” says April Jimenez, a senior consultant at recruiters Huxley in Singapore.

Asset management fund distribution into private banking

“The booming private banking market in Asia is attracting talent from other sectors. For example, institutional asset management fund distribution specialists are being hired into private banking as fund specialists,” says Jack Metters, principal consultant of private banking and wealth management at recruiters Selby Jennings in Hong Kong. “Corporate finance professionals in investment banking are also being recruited into private banking to provide ultra-high net worth clients with financing solutions,” he adds.

TMT bankers into corporate development

Chinese technology firms are increasingly building large in-house corporate development teams and are recruiting Hong Kong investment bankers to help them with takeovers and listings. “I’m seeing more and more Chinese tech corporates hiring bankers,” says Hubert Tam, managing partner at search firm Sirius Partners in Hong Kong. Chinese tech companies want to grow overseas and are interested in bankers who have cross-border deal expertise. The corporate development ranks of both Alibaba and Tencent, for example, are full of ex-bankers.

Commodities salespeople into commodities companies

Commodities salespeople at banks are moving to in-house roles at commodities companies in Singapore, says Angela Kuek, director of search firm Meyer Consulting Group. This career change combines both push factors away from banking (redundancies at FICC teams at global banks) and pull factors into the corporate sector (commodities firms continue to expand in Singapore, the industry’s Asian hub). “They usually go to an ex-client and look after the financing structures for the company, liaising with banks on its behalf,” says Kuek.

Everything into audit

“I’ve recently seen more people from a non-audit background moving into the audit function in Asia,” says a Hong Kong-based recruiter. “The main examples have been from operations, trading, technology and risk. The reason banks hire them – in addition to their potential for developing strong audit skills – is because of their subject-matter expertise in the areas they will be auditing. In this market, where it’s important to identify the next big control gap, someone with first-hand knowledge of their space potentially has a lot to offer in audit.”

Sell-side operations to buy-side operations

With large banks still offshoring back-office roles away from Singapore and Hong Kong, some operations people are seeking sanctuary in the buy-side. “We had a candidate who moved from an investment bank to an investment management firm, focusing on derivatives operations,” says Orelia Chan, an associate director at Pure Search in Singapore. “The employer initially preferred someone from the buy-side, but they realised that some operations skills are transferable, so they became open to banking candidates with the right product knowledge, managerial experience and personality fit.”

Have a confidential story, tip, or comment you’d like to share? Contact: smortlock@efinancialcareers.com

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Image credit: ArtRachen01, Getty

Morgan Stanley made headlines around this time last year when it narrowly edged out Goldman Sachs as the world’s top equity underwriter – an honor that had previously been passed around between Goldman, J.P. Morgan and Bank of America. But unlike its rivals, Morgan Stanley is not giving back its crown. In fact, it significantly widened its edge as the best IPO bank in the industry.

Morgan Stanley increased its stock underwriting market share to more than 10% in 2018, up a full percentage point from the previous year when it just squeezed past Goldman Sachs, according to numbers compiled by Bloomberg. The U.S. bank now has a near-1.5 percentage point lead over its closest competitor as Goldman ceded market share in 2018.

Morgan Stanley’s IPO empire is buoyed particularly by its overseas business and its top-ranked technology team led by famed rainmaker Michael Grimes, known for going the extra mile – and more – to win over clients, according to a recent Wall Street Journal exposé. A millionaire many times over, Grimes reportedly spent years moonlighting as an Uber driver to help position Morgan Stanley as the main contender to underwrite the expectedly-massive forthcoming IPO. Years! He also studied his daughter’s usage of Pandora ahead of the music-streaming service’s initial public offering and showed off his own family tree that he and his mother created while pitching Ancestory.com.

Part of what has made Morgan Stanley so formidable in underwriting is the stability at the top rung of the team. Grimes is a Morgan Stanley lifer, as are many of his senior colleagues who concentrate on other sectors. The bank also relies heavily on its private financing arm, tapping its high-net-worth clients to raise millions for startups that it hopes to eventually court when they go public. Goldman’s private fundraising franchise is “a fraction” the size of Morgan Stanley’s, according to Bloomberg. That advantage is surely a big help to its IPO bankers.

Elsewhere, 2019 is set to be one of the worst money-raising environments for hedge funds in recent memory. Just one new fund set to open its doors in the coming months has raised north of $1 billion in commitments. As a whole, the industry saw more than $11 billion in outflows during the first three quarters of 2018 as many notable hedge funds shuttered after posting disappointing returns. David Einhorn’s Greenlight Capital reportedly declined an eye-opening 34% in 2018.

The past year wasn’t much better for most asset managers. Facing competition from low-cost index funds as well as more profitable alternative funds, traditional active asset managers have both lost investors and been forced to cut fees, according to a new report. Active managers’ share of global industry revenues fell to 41% in 2017, down from 64% in 2003. That number is expected to shrink to 36% by 2022.

Meanwhile:

Here’s a great piece from Bloomberg that lays out the key points each big bank made in their newly-released 2019 investment outlooks. The word “bear” is used more than once. (Bloomberg)

Certain colleges and universities are employing a new and somewhat controversial tactic to lock in more applicants earlier in the year. Some students who applied through regular admissions are receiving emails asking them to commit to the school early if they are accepted. A preemptive commitment doesn’t guarantee admittance, but it would oblige students to pull their other applications if they get in. The tactic will surely up the pressure on students, as those who apply early on their own volition are historically greeted with a softer admission rate. (WSJ)

Former Goldman Sachs president and ex-Trump adviser Gary Cohn has reportedly found himself a new part-time gig. He’s going to be teaching a graduate-level course at Harvard about “bipartisanship and economic policy or something like that.” (Dealbreaker)

The number of positive drug tests increased by 13% between 2015 and 2017 at financial and insurance companies. (Dealbreaker)

The incoming CFO at Netflix has had an interesting week. He was fired by his previous employer, video game maker Activision, on New Year’s Eve for breaking a clause in his contract that barred him from negotiating with other potential employers. Spencer Neumann wasn’t on the street long, however. Netflix announced his hiring on Wednesday. (Bloomberg)

Starting this year, publicly-listed U.K. companies with more than 250 employees will need to justify pay packages for its directors to show that they align with the interest of shareholders. Companies will also need to disclose the ratio of its CEO’s pay compared to the median compensation of its employees. (The Times)

Senator Elizabeth Warren has launched an exploratory committee for a potential 2020 presidential run. The Massachusetts democrat has made her name in Washington by taking on big banks with a particular focus on industry pay. (Bloomberg)

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Typically, banks rarely make big-name hires near the end of the year as bonus season looms. That wasn’t the case in 2018; banks continued poaching talent well into the winter months in certain business areas with the job market tightening. The latest example is Denis Gardrat, who J.P. Morgan just hired as its new head of credit structuring. Gardrat started in London as a managing director in December.

The move to J.P. Morgan follows a near 15-year stint at BNP Paribas, where Gardrat eventually rose to the head of credit structuring in Europe. This isn’t the first time Gardrat’s name has been mentioned in the news. He’s been quoted as an expert on investment trends on several occasions, including by Bloomberg and the FT.

Based on recent bonus predictions, Gardrat may be making a move at just the right time. Credit is expected to be one of the sour spots for 2018 bonuses at BNP, according to banking intelligence firm Tricumen. J.P. Morgan declined to comment on the hiring of Gardrat.

Follow @BeecherTuttle

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You’re a student who wants to work in an investment bank. You’ve applied for a front office job in sales and trading and you don’t have an offer. What you do have though is an offer to work in operations – in trade booking, settlements or clearing. Do you accept? Well.

Before you accept any job in operations, you need to know that if banks could close down their operations departments, they would do so in a heartbeat.

For a bank, operations simply a cost. It’s also a high cost due to their poor internal booking systems. When you work in operations you are acutely aware of this.

My own observations of operations careers in action reflect the dangers. When I started working on the trading floor I worked next to a team of seven operations women and men. They were working extremely hard, booking one trade after the other manually, day in day out.

If that sounds boring, it was. None of that team liked what they were doing. Some had to do it for an income, others were hoping to jump to the other side and work as a trader. They were all confused about how they’d progress in their jobs.

After around a year or so, people in the ops team started to look panicked. It turned out that management wanted to move their function out of London. They’d been told they could either move to another country, find alternative work internally, or accept redundancy. Five of them left. One moved into client onboarding. Only one managed to actually transition to becoming a trader (and he’d secretly been taking CFA exams on the sly).

The thing is that operations (ops) is a thankless job. All you do is book trades and with the cumbersome process at some banks, the chances of errors are high – no matter how good you are. It’s almost certain, therefore, that you are going to get an email with a Managing Director CCed saying that a focus/priority account has complained about how bad you are. Unless operations is what you want to do and are aware of the stresses involved including late nights of trying to re-book trades (sometimes it’s because of a system breaking down or a human error), it’s probably best avoided.

And if you’re joining operations just to hope to get into sales trading and trading, then good luck to you. Salespeople and traders are themselves under pressure. – Trading is more algorithmic and sales is becoming increasingly low touch. Unless you have excellent coding or trading skills, a move is now very unlikely to happen. If you work in ops and someone promises to help you move internally, don’t get too excited. Within a year or two, that person is highly likely to have disappeared themselves.

A job in operations is a double edged sword. If you’re good at ops, the firm is more likely not want move you because they need you. And if you’re not good at it, you won’t last. Either way, you’re in danger of feeling unfulfilled and underpaid.

Gauthier Bourque is a pseudonym

Social media is not just for fun. If managed properly, it can help you expand your network within banking and finance, build relationships with friends, gain trust from your colleagues, help win and retain clients, and even get you a new banking job. You will also attract people who share your values and interests.

Many of us have hundreds, if not thousands of online connections, so our posts tend to get lost in seas of food, holidays and kids’ photos. What should we post online to get more engagement and build a personal brand as banking professionals? Here are my nine tips:

1. Be consistent

To develop an online brand as a banker, you’ll want to make sure you have a consistent profile across all social media platforms. For example, you need the same (or a similar) profile photo, background image and bio across Instagram, Facebook, Twitter, LinkedIn and WhatsApp. And don’t fall into the trap of thinking your photo needs to be less formal for Facebook compared with LinkedIn – use a professional-looking image on all of them. When you move your conversation from, say, Facebook to WhatsApp, your connections will feel seamless, and your brand will stay intact.

2. Take interesting photos

The human brain is attracted to visuals more than text, so post interesting and thoughtful photos. Shoot from a low or high angle to give your connections a different perspective. Capture vivid colours. Create photo stories that include an introductory shot, a closeup to show details, and a parting shot to end the story.

3. Start your social posts strongly

Adults today have an attention span of only about eight seconds. When you write, you’ll want to capture readers’ attention with the first sentence. Here’s a great example from the evolutionary biologist Richard Dawkins: “We are going to die, and that makes us the lucky ones. Most people are never going to die because they are never going to be born…”.

4. Tell a story

People are attracted to stories, so you’ll want to tell stories in your posts. Stories have three key elements: 1) setting and characters, 2) conflict, and 3) resolution. Whether they are Cinderella stories or Mission Impossible movies, they all have the same three elements. But they need not be long. The shortest story has six words: “For sale: baby shoes, never worn.” By Ernest Hemingway.

5. Post once a week

Ideally, you’ll want to post once a week, but if you can’t spare the time, once a month is also fine. The best time to post is when your connections are likely to be checking their social media, so posting during the rush-hour evening commute is a good idea. Weekend mornings and evenings work well, too.

6. Add value to readers

Being upgraded to business or first class may make you feel euphoric but writing a post about this doesn’t do much for your connections. To build your brand, you’ll want to add value to them. If you want to post about the food you just ate, go behind the scenes, talk to the chef, and take photos of the kitchen. If you want to post about your holiday, write about the local friend you just met.

7. Go from online to offline

To have interesting online posts, you’ll want to engage in interesting offline activities. Hosting networking drinks, speaking at events and interviewing interesting people are a few examples.

8. Be observant

Ideas for writing social posts can be right in front of your eyes. When I visited Gardens by the Bay in Singapore recently during a tour, I saw three gardeners removing lotus plants. I spoke with them and found out they were doing this to allow new flowers to grow. Removing the old and making ways for the new – that’s life, isn’t it? So instead of posting photos of the well-known tourist site, I wrote about my interesting conversation with the gardeners.

9. Reveal failure

Most social media post only show the positive side of life, but we know that life has its ups and downs. So when you post something that reveals your weakness or talks about your failure, you make it easier for others to share their failures too. Remember when there’s no conflict, there’s no story.

Singaporean Eric Sim failed his mathematics exams at age 13 and then went on to fail English at age 14. Now, he writes about life and career skills for his 2.5m followers on Linkedin. He is the founder of Institute of Life, which trains young professionals to be successful at work and in life. A former managing director at UBS Investment Bank in Hong Kong, Eric is also Adjunct Associate Professor at HKUST.

As of the end of the third quarter, Apple was the third most-held stock by U.S. hedge funds, behind only Microsoft and Amazon. So, when the iPhone maker issued its first sales warning in nearly a decade late Wednesday afternoon, it was the professionals who took the biggest beating. Meanwhile, one Goldman Sachs analyst stood a bit taller.

AQR Capital Management, Millennium, D.E. Shaw and five other big-name hedge funds saw the value of their holdings plunge roughly $2.13 billion after Apple issued new guidance, according to Bloomberg. Quant fund AQR suffered paper losses of around $732 million alone on Thursday when Apple stock fell as much as 9% (after tumbling in after-hours trading the previous day.) With Apple being its biggest holding as of Sept. 30, Boston hedge fund giant Adage Capital saw its stake fall by roughly $500 million. Meanwhile, Millennium may have lost as much as $300 million, according to the data.

However, it’s worth noting that Bloomberg’s calculations are based on shares held as of the end of Q3 and don’t account for short positions or options. Investors can only hope their fund managers thinned their Apple holdings during the final three months of the year. – Or better yet: they listened to one prescient Goldman Sachs analyst and shorted the stock.

Back in November, Goldman analyst Rod Hall cut his price target on Apple shares from $209 to $182, noting that he was concerned that end demand for new iPhone models was “deteriorating,” and that Apple may have “miscalculated” its strategy. Hall had previously cut the tech company’s price target an additional two times in October and early November. This came after he and other Goldman analysts admitted in a September note to clients that they needed to “eat our hat somewhat on our cautious stance” on Apple as the stock surged into autumn. Hall can now spit that hat out as he is the most bearish analyst that covers Apple, according to Business Insider.

He took a bit of a bow – or as much of one as an equity analyst can take – in a note sent to clients on Thursday. “We have been flagging China demand issues since late September and Apple’s guidance cut confirms our view,” he wrote. Slow clap…

Elsewhere, a UBS investment banker has left the firm after her husband agreed to pay more than $500k in fines to settle an insider trading lawsuit. The SEC accused the husband of UBS’s Annie Wang of eavesdropping on his then-fiancée’s work calls and trading on the information that he overheard. Wang wasn’t accused of any wrongdoing – and the bank backed her up – but she is reportedly no longer with UBS, according to Bloomberg.

Meanwhile:

Activist hedge fund Third Point was down roughly 11% last year. Dan Loeb’s firm was one of many notable hedge funds to post double-digit declines in 2018. David Einhorn’s Greenlight Capital reportedly declined an eye-opening 34% last year. (WSJ)

Investors who are blaming quants for recent market turmoil are “insane,” according to AQR founder Clifford Asness. “We’ve done lousily, and I’m not blaming others,” he told the FT. “I’m sick of people saying this without a theory for why (quants exacerbate volatility). Markets move for reasons like corporate news, economic data, or what the president or the central bank says.” (FT)

Independent investment bank Houlihan Lokey saw its profits more than double in Europe in 2018 as the firm continues to expand outside of the U.S. (Financial News)

UBS Chairman Axel Weber dismissed rumors that the Swiss bank was considering merging with Deutsche Bank or any other firm. (Reuters)

A mini flash crash hit the currency markets this week, possibly due to Asian traders being on vacation coupled with the “twilight hour” – or the period of time when U.S. traders are heading home but before markets open in Singapore and Hong Kong. (WSJ)

Here’s the inside story on VC firm August Capital, which abruptly ended fundraising and returned limited partner commitments without first consulting with some general partners and principals. The staff was apparently blindsided, and many still don’t know why the move was made. “Younger people there will need to leave in order to continue their careers,” said one limited partner. (Axios)

The average Manhattan apartment is now priced at less than $1 million, the lowest figure in three years. (Bloomberg)

Compensation for senior management at London alternative asset manager Cheyne Capital nearly doubled last year as profits increased by roughly 80%. (The Telegraph)

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A long list of notable hedge funds suffered through a difficult 2018, with most of the damage coming during the final three months of the year. David Einhorn’s Greenlight Capital reportedly declined an astounding 34% last year. Activist hedge fund Third Point was down roughly 11% in 2018; AQR Capital Management admitted to having one of the worst years in its 20-year history, just to name a few examples.

That all said, several big hedge funds are still doing quite a bit of hiring, focusing particularly on quants. Alternative data provider Thinknum went to LinkedIn to pull out some recent figures for big-name hedge funds, looking at total headcount during the third quarter and comparing it to the end of the year. While Thinknum acknowledges that the data is obviously not going to be completely accurate coming from LinkedIn, the percentage changes should be fairly indicative of how aggressively a fund is adding or subtracting talent.

For the chart below, we cherrypicked some of the bigger names as well as the hedge funds that appear to be the busiest. The quarter-on-quarter changes are highlighted in both raw numbers and percentages. Some of the bigger firms aren’t fluctuating at the same trajectory but look to be adding or subtracting more people.

As you can see below, Point72 appears to be one of the hedge funds doing the most hiring. Steven Cohen’s firm has been actively adding quants, building up its macro team and growing its Point72 Academy to increase headcount at the junior level. Unsurprisingly, the two other firms that top the list are known as specialists: macro fund Balyasny Asset Management and quant fund AQR. Meanwhile, U.K.-based Man Group is a giant that always seems to be in growth mode.

However, there are two funds that weren’t included in the research that would likely be in the mix at the top. As the biggest hedge fund startup ever, ExodusPoint Capital Management has been hiring dozens on portfolio managers, traders and analysts in New York and London. Millennium Management has also been in firm growth mode.

As for the two firms at the bottom of the list, Citadel is a bit a of a surprise. It may just be a bit of an anomaly. And as Thinknum mentions in their report, Winton recently spun off its data analytics unit – a move that likely manipulated the numbers a bit.

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I’ll be honest, I applied to my Big Four firm in Singapore as an auditor because I knew it would be a stable job for a graduate (I have a BBA in accountancy from NUS). Unlike in banking, not many people get fired from the Big Four.

Having been here for more than two years, however, I now have a different attitude. One of the main reasons that grads should apply to the Big Four is because you get to work with so many other young people – and that’s fun. Being here is like working on an ongoing university group project, and getting paid for it. Big Four firms typically take on more grads than even the larger banks in Singapore, so your cohort is huge no matter what department you’re in.

My working and social relations with the people in my year are great because we’re a big enough group to support each other and be a force within the organisation. I’m not just the only recent grad among masses of other staff, often overlooked and given menial tasks, as perhaps I would be at a bank.

Moreover (and I didn’t realise this before I started), my whole team is pretty young. The so-called ‘seniors’ here, including my boss, are typically only four or five years older than me – they’re still in their 20s. The lack of a big age gap makes the department non-hierarchical and means I can wander up to anyone and ask them questions if I ever get stuck. That makes me more efficient in my job.

I’m shocked by how friendly a workplace this is. It may not all be down to peoples’ ages, but I’m not so sure I’d feel this comfortable in an older team. It’s peak audit season in Singapore right now and I’m typically leaving the office at 11pm. The funny thing is – I don’t mind. That’s partly because I enjoy the technical side of the work, but it’s also because I get on with everyone and I know someone will always support me with a client problem (without making a fuss and without any office politics).

Perhaps I should have suspected all this during the interview process, which was thorough without being overly formal or long. There were no assessment centres, so after the psychometric test I was thrown straight into a one-on-one interview with a partner.

He asked technical accounting questions and situational questions for the first half-hour, with an emphasis on understanding how well I work in teams (for example: “When you were at university, what did you do when you encountered problems during group work?”).

Surprisingly to me at the time, my Big Four job interview then became an informative and quite causal chat in which I asked the questions and the partner gave me frank answers about the pros and cons of the firm. What are the working hours like? “Not easy compared with many other grad jobs,” he replied.

I also got to ask about overseas secondments, the route to partnership and other things that might normally be deemed too selfish and inappropriate for a student to ask a senior manager. So my advice is this: don’t go for a Big Four audit role because it’s an easier option than banking or because you have less chance of being laid off…go for it because you’ll probably enjoy the experience.

Polly Seah (not her real name) joined a Big Four accounting firm in Singapore as a graduate in 2016.

Image credit: wundervisuals, Getty

If you work in the financial services industry and you want to be well-rested, you might want to avoid the sell-side (investment banks). You might want to especially avoid investment banking divisions (IBD) where M&A and equity and debt capital markets deals happen. You might also want to avoid working in Singapore. And you could always sidestep Goldman Sachs.

So suggested the results to our global survey on sleeping patterns in the financial services industry. Over 2,200 people. Most of them (around 60%) said they were tired or exhausted. Some, however, were more exhausted than others.

The most frazzled people are found in investment banking divisions. The least are found in technology

Investment banking divisions (IBD) have a reputation for long hours. If you come across someone putting-in an 80-100 week, he or she will almost certainly be in IBD. IBD respondents from New York City to Europe to Australia complained of 80-100 weeks, working in “sweatshops,” making the wrong career choices and having their lives “ruined.” One 20-something London analyst said she sleeps four hours on weeknights and catches up at weekends. An NYC investment banker said it’s not so much the hours but the intensity and unpredictability that’s killer: “Week in, week out, year in, year out….the next surprise all-nighter is always one email or press release away from coming to get you.”

22% of respondents in investment banking divisions said they had less than five hours’ sleep each night. This might be why 20% of them also confessed to being strung out and exhausted (another 47% were “tired.”) By comparison, only 5% of technology professionals said they get less than five hours’ sleep each night and only 11% are on the verge of collapse.

The ongoing exhaustion in IBD comes despite banks’ efforts to curtail working hours for junior staff. Banks’ initiatives mostly involve mandatory time off at weekends, but IBD juniors said they haven’t done much good. There are complaints that “protected weekends” aren’t enforced, that the “Saturdays off” rule simply means longer hours on Thursdays and Fridays, and that while Saturday is a rest day, Sunday is back to work.

This doesn’t mean, however, that technology professionals in financial services have it easy. 55% of our tech respondents said they were still tired or exhausted (although none admitted to being strung-out and barely functioning). One Bank of America Merrill Lynch technology professional said the late night calls from other time zones are the real killer in IT.

The surprise (or maybe not to those who work in it) result for divisional fatigue came from combined risk, compliance and finance teams – the so-called “control functions”. Here, 18% of our respondents said they were getting less than five hours sleep’ and the same proportion (unsurprisingly) said they were exhausted or totally strung out. Some blamed stress. Others blamed lower pay: because control professionals are paid less than front office bankers and traders, they live further out where housing is cheaper. This means longer commute times. Longer commute times mean less time in bed.

By comparison, sales and trading jobs look like a good option for people who want to earn good money and be well-rested. However, they too have their downsides. Sales and trading professionals go to bed early (50% are in bed before 10pm). But they also get up early (50% are up before 6am). Although one respondent said sales and trading hours are more “humane”, another Goldman Sachs trader said it’s difficult to switch off and that, “Working 7am to 8-9 pm in sales and trading, and keeping track of the night’s news keeps you under, “work and sleepless mode,” for at least 14-15 hours a day, with no lunch and breakfast breaks during the day.”

One London trader in his late 20s said juniors on structured product and exotics desks have it worse: they have to be in early and stay late to check risk. “You’re also expected to read all the research you are interested in, all the while being sharp. It’s a very tough position,” he said.

Another London trader at BAML, cast aspersions on the notion that people in the investment banking division work the hardest and get the least sleep. “I work in markets, 13 hours a day,” he said. “While someone might think that my colleagues in banking work more, I don’t necessarily agree. I work intensely throughout the day, barely leaving the desk for lunch. Meanwhile I see my colleagues in banking slide in at 10am, only to kick of the day with a gym session. Roughly two hours later I see them enjoying a nice 1 hour lunch with their colleagues.”

The same trader accused his investment banking peers of hedonism. “On the weekends, I sleep, work out and take care of myself while these banking kids go to way too fancy clubs drinking way too much alcohol. If I did that I would surely fall asleep on my desk on Monday morning as well. Markets is filled with smart people that love their job, and just because we don’t talk about it doesn’t mean we don’t work hard. We are the true warriors, think about that.”

Hedge fund people get no sleep, but they can handle it

Needless to say, exhaustion isn’t just about hours in bed. It’s also about stamina. Here, hedge fund professionals seem to have the upper hand. Even though 33% of them said they sleep less than five hours a night, only 11% of hedge fund professionals told us they were exhausted or strung out. By comparison, 15% of private equity people said they sleep less than five hours and 10% were exhausted and strung out. PE is for pussies and true sleepless warriors work in hedge funds, or so it seems.

New York bankers get no sleep, but they can handle it. Singaporean bankers are split into the very well-rested and very exhausted

True warriors also seem to situate themselves in New York City. Here, only 14% of people said they were exhausted or strong out, despite 12% having less than five hours’ sleep and 54% having less than six hours. Singapore (suprisingly) had the highest proportion of exhausted and strung out respondents and a high proportion of well rested respondents, making it look like one extreme or the other in the island city. If you really want to be well-rested, though, you need to work in Continental Europe (suggesting Brexit might have its upsides).

You might think you’re exhausted in your early 20s, but this is nothing to how you’ll feel in your mid-30s and 40s

Our survey also revealed that – contrary to popular perception – finance careers don’t necessarily become less tiring as you get older. Perversely, finance professionals aged over 40 were almost as likely to have less than six and five hours’ sleep as those aged between 20-25. Exhaustion peaks between 30 and 35 and again at 40+. The former seems to have something to do with starting a family (“I have recently found parenting is even more exhausting [than banking],” said one respondent). The latter seems simply to do with getting old.

Basically, VPs and managing directors are tired. One (ex-) MD complained of the relentless workload, ridiculous expectations and a dysfunctional business model that “does not get better as you climb the ladder.” “I quit the coveted Managing Director role to gain some sanity back in my life,” he said.

The most exhausted and strung out people are at Goldman Sachs. The least are at UBS

Lastly, the survey highlighted some fairly drastic divergences in exhaustion by bank. A lot of people at Goldman Sachs are very tired. Not so many people at J.P. Morgan and UBS are.

Nonetheless, 39% of Goldman respondents also said they were adequately or well rested, and some Goldman respondents wanted to stress that life at the firm isn’t all bad. One said working hours are exaggerated. Another said the trade-off is worth it: “Working hard is tough but the benefits out weight the downside. Your day job is you “debt” you need to pay down; and your evenings/weekend are your “equity” – so if you want to succeed you need to maximize your investment opportunity.”

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UBS made headlines late last year when it was reported that the bank was intensifying succession planning for Chief Executive Officer Sergio Ermotti. While banks always have a succession plan in place, the Bloomberg report was eye-opening because Chairman Axel Weber was said to prefer an outside candidate to eventually replace Ermotti, who earlier in 2018 noted that “something probably would not have gone well” if his successor wasn’t already in the building. Now the puzzle pieces are coming together – and the end result could be a big win for investment bankers at UBS.

The Swiss bank is reportedly in early talks with former Bank of America investment banking boss Christian Meissner about a senior position that could set him up as the heir apparent to Ermotti. While no deal is in place, a potential Meissner takeover would likely be a welcome sight for UBS investment bankers, who have been concerned following the recent departure of longtime group head Andrea Orcel after he left in September to become the new CEO of Spanish bank Santander. Orcel wasn’t beloved by all at UBS, but he was the face of the investment bank and reportedly shielded and retained top dealmakers when Ermotti began steering the firm toward becoming more of a wealth management shop post-crisis. With Orcel gone, investment bankers at UBS lost their top advocate and have been fearing for their future, according to the FT.

But the potential for a Meissner appointment surely provides a sense of optimism for bankers at UBS. The former BofA investment banking chief reportedly left the firm last year over disagreements with the bank’s perceived shrinking appetite for risk-taking, particularly in M&A and leveraged finance. Bank of America was said to have started passing on potentially lucrative overseas deals in favor of safer mid-market work in the U.S. – a strategy that reportedly frustrated many bankers and led to a series of defections. Meissner’s background and recent history suggests that he would champion UBS’s investment bank, if he finds his way to the top chair. The current top internal candidates to eventually replace Ermotti include the wealth management unit’s co-heads, Martin Blessing and Tom Naratil.

It’s important to note, however, that Ermotti isn’t said to be preparing to leave anytime soon. Earlier reports regarding the bank’s succession planning indicated that he could remain in charge for at least another two years. Plus, UBS just recently named two co-heads to replace Orcel, so it’s unlikely that Meissner could walk in and take the reins of UBS’s investment bank. Still, the potential hiring of Meissner – in any senior role – would likely be greeted warmly by UBS investment bankers.

Elsewhere, Barclays is starting to ramp up its Brexit plans in a serious way. The British bank has appointed roughly 100 investment bankers in Europe through external hires and internal reassignments, according to Financial News. Barclays has also made another 65 graduate hires as it prepares for the U.K.’s impending exit from the EU. If you’re looking for a banking job in Europe, Barclays seems to be a good place to start.

Meanwhile:

The gender pay gap in the U.K. at firms like HSBC, Deloitte, McKinsey and Nomura has actually gotten even worse. (Financial News)

Each day, a new article is published about a renowned hedge fund that suffered a double-digit loss in 2018. The latest involves Larry Robbins’ Glenview Capital Management, which saw its main fund decline more than 16% last year. Like some other funds, Glenview Capital was managing the year reasonably well until December, when the fund declined 14%. (WSJ)

And then there’s Bridgewater Associates. The flagship fund of Ray Dalio’s famed Connecticut firm returned more than 14% last year. (Bloomberg)

Roughly three years ago, Bank of America became one of the first companies in the U.K. to extend its health insurance policy to include free gender reassignment surgery. Yet the bank has reportedly come under fire by some for not also offering infertility diagnosis and IVF. (The Times)

If you are any good at your job, you are going to face “tormentors” within your own company – people who try to obstruct and derail you. That’s a good sign, according to one economist and former MD at Banker’s Trust. It means you are doing something right and are scaring them, particularly when you work in a competitive environment like banking. Embrace it. (The Times)

Three former London-based Credit Suisse bankers have been brought up on U.S. fraud charges related to loans to state-owned companies in Mozambique. U.K. authorities abandoned the investigation two months ago. (The Guardian)

Part of J.P. Morgan’s latest mantra under CEO Jamie Dimon is to be more like Amazon. The bank has adopted Amazon-inspired initiatives as the two companies partner and compete with one another. Dimon led a senior management meeting back in 2017 to specifically address how Amazon could make a larger play into financial services and how J.P. Morgan could fit in. (WSJ)

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On the surface, there aren’t many big surprises with the new investment banking league tables released by Dealogic (below). In terms of global revenue, only one new bank jumped into the top 10. Finishing ninth, Jefferies displaced RBC, which booked the 10th most revenue in 2017. The other headliner is Bank of America, which was leapfrogged by Morgan Stanley, mostly due to BofA’s underperforming M&A group.

That said, the main takeaway may be the continued dominance of J.P. Morgan and Goldman Sachs. Finishing first and second yet again, both banks increased their market share by a considerable number. J.P. Morgan’s global investment banking revenue share jumped from 8.1% in 2017 to 8.7% last year; Goldman Sachs’ share rose from 7.2% to 7.8%.

While those increases may not appear overly significant, they are. Each investment bank earned around $300m more in revenue in 2018 than they did the previous year, which is more impressive when you consider that the top 10 banks collectively brought in roughly $1.5b less in total IB revenue last year. The numbers fell in every region except Europe (+2%) and Australiasia (+20%). Meanwhile, Bank of America, Citi, Credit Suisse, Barclays and Deutsche Bank all ceded market share as their IB revenues fell year-on-year. Morgan Stanley and Jefferies were the only two other banks to see increases in revenue and market share.

Both J.P. Morgan and Goldman Sachs rode a hot hand in M&A and equity capital markets (ECM) while their debt capital markets (DCM) group faded a bit. J.P. Morgan was particularly dominant in ECM as it passed Morgan Stanley for the top spot by booking $120m more revenue in 2018 than it did the previous year. With many banks prioritizing businesses like wealth management, the strong got even stronger in investment banking in 2018.

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If you’re at Bank of America Merrill Lynch in London, this is unlikely to be new news, but for equities professionals elsewhere in the City it might come as a revelation: Daniel Sanders, one of BofA’s most senior equities professionals in the City, has migrated.

Sanders, who was co-head of equities trading for Europe, the Middle East and Africa (EMEA) moved to New York in October 2018. His move was not reported at the time. In his new role, Sanders is understood to be heading execution services trading for the Americas region.

BAML insiders say Sanders was one of the longest serving equities professionals at the bank in London. He joined Merrill Lynch in 2001 – just six years after the bank bought Smith New Court, the UK’s largest independent stock broker, and had been in a senior equities trading role since at least 2012. His exit is likely to be felt keenly among colleagues.

Sanders’ migration and focus on execution comes both as equities divisions in Europe have been struggling with MiFID II and as banks everywhere focus more heavily on executing trades electronically.

Revenues in Bank of America’s equities sales and trading business increased nearly 20% in the first nine months of 2018 compared to the first nine months of 2017 (compared to an increase of 19% at Citi, 22% at J.P. Morgan and 15% at Goldman Sachs). However, intelligence firm Tricumen says BofA’s cash equities business under-performed compared to rivals during the same period.

Bank of America declined to comment on Sanders’ move.

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If you’re looking for a new job in London for the New Year and aesthetics are high on your list of priorities, you might want to try Morgan Stanley. We hear that the U.S. bank’s London offices are really rather special.

“Morgan Stanley’s office in Canary Wharf is incredible,” says one recent hire with experience of working at various other firms. “The toilets are exceptional – they’re cleaned so regularly that it’s like a five star hotel. The food is pretty amazing too.”

We understand from other contemporary Morgan Stanley employees that it’s not just the London washrooms that are worthy of note. It’s also the gym and its attendant facilities. The bank’s Canary Wharf fitness centre was refurbished at the end of 2018 and is understood to have reopened on January 3, equipped with a new high tech spin studio and heavily upgraded and expanded changing rooms and shower facilities.

By comparison, Morgan Stanley insiders suggest the facilities at other banks in London can be somewhat lacking. “The toilets in Barclays’ North Colonnade building rarely seem to work properly,” says one. Another says the washrooms at RBS’s head office in the City are, “worse than any other government building.” Another says the food in the canteen at J.P. Morgan’s London Wall building used to be comparable to Morgan Stanley’s at Canary Wharf, but that the temperature at J.P. Morgan’s canteen was kept too low to ensure hungry staff, “didn’t hang around.”

Morgan Stanley’s New York staff may feel slightly envious of their British-based rivals. “No one would praise the toilets on the third floor of 1585 Broadway,” says a trader at Morgan Stanley in New York. “The trading floor here hasn’t been refurbished since the mid-90s when the bank moved in.” Staff based at Morgan Stanley’s Paris office in Rue Monceau say the toilets are nothing to write home about but that the historic building boasts nice gardens which are used by the bank for barbecues in the summer.

Insiders at Morgan Stanley say the bank is due to announce its managing director (MD) promotions on January 15. Those lucky enough to make the cut in London will gain access to the bank’s 11th floor dining area, where MDs can eat and entertain clients. All London staff can frequent a “nice roof garden,” although there are complaints that this is overlooked by J.P. Morgan’s building, which “towers over it.”

Morgan Stanley declined to comment on the allure of its facilities. The upgrading of the bank’s Canary Wharf washrooms and gym is understood to be unrelated to the redesign of the bank’s office space under Rob Rooney, the bank’s new(ish) head of technology and former head of EMEA. Rooney has been revamping Morgan Stanley with open plan offices, wooden floors, exposed pipe work and mustard-coloured chairs in an effort to imbue the bank with the vibe of a tech-firm and to appeal to young technologists. One quant at Canary Wharf complains that it hasn’t made much difference: “It’s still an investment bank in Canary Wharf with mostly grey carpets. There are just a few bright chairs scattered around.”

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It may be a whole new year, but some things haven’t changed. In January 2019 there’s still just as much buzz around machine learning as there was in December 2018. This may even be the year in which banks have something to show for all their investment in sentient algorithms.

As we start the year, Goldman Sachs is currently advertising around 100 jobs specifying that candidates must have machine learning skills globally. Machine learning skills are an increasingly important component of various jobs at the firm, from engineering through to trading and structuring.

However, one subset of machine learning stands to be increasingly important at GS (and by extension other banks) in 2019 – natural language processing (NLP). In a recent interview with Yale School of Management, Charles Elkan, whom Goldman hired from Amazon in April 2018 to help lead its machine learning and AI strategies, explained why.

Large banks are “party to thousands or possibly hundreds of thousands of contracts,” said Elkan. He added that it’s not realistic for banks to know in real time what the content of those contracts, or which clauses might be activated by events in future. However, with natural language processing, Elkan said banks will be able to automate not only their understanding of what each contract contains, but their understanding of the news flow that might impact their innumerable contracts.

In this way, Elkan said banks will be able to use NLP to develop a, “close to real time understanding of what their full portfolio of positions is.” In turn, he said this will greatly improve risk management and will be “good for society:” by reducing surprises, NLP will reduce the risk of future financial crises.

Elkan doesn’t say so explicitly, but the implication of his Yale interview is that NLP might turn out to be the most important application of machine learning in investment banks. While other industries can make use of data going back decades, Elkan notes that this is less relevant in banking. Data on lung cancer from the 1990s is still relevant now, he notes – but financial markets have changed a lot in the past 20 years.

Goldman is currently advertising 23 jobs for natural language processing experts, while over 200 current staff specify it as a specialism on their CVs. Elkan himself is a specialist in machine learning and data science who previously worked on Amazon’s recommendation engine. One of Goldman’s top NLP specialists is Ramanathan Narayanan, a new York-based managing director and technology fellow with a PhD in text mining from Northwestern University.

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HSBC has ambitious growth plans for Asia, as it looks to serve the rising number of wealthy individuals in the region. The Group plans to add 1,300 positions by 2020, more than 600 of which will be in retail banking and wealth management.

Bonnie Qiu, Group Head of Premier and Jade at HSBC, explains that private wealth in Asia is growing much faster than in other regions, particularly in countries such as China, where the rising middle class is still in the wealth creation stage. “We have statistics that show Asia’s private wealth is going to overtake North America by 2021. When we look at the landscape and the market, it tells us that the opportunity is there to actually grow the wealth business for Asia,” she says.

To meet the needs of this segment, HSBC has launched a new banking proposition called Jade. Qiu explains that Jade is designed to service customers who sit in the pre-private bank segment with assets of between US$1 million to US$5 million. “Jade is the new proposition for those who have more complex needs than Premier customers, but do not yet need private banking. It is a segment that is underserviced by most other financial institutions,” she says.

To help serve these customers’ needs, HSBC is recruiting into their client facing and investment focused teams across mainland China, Hong Kong and Singapore. “We are looking for Jade Directors, who will be our most senior relationship managers within the retail banking wealth management environment to look after these Jade clients. We will also have Jade Business Development Directors. They will be a new team we are looking to set up to go outbound and acquire customers, as Jade customers are very busy and may not be available to come to the bank,” She adds that talent interested in relationship manager roles will need to have experience in customer-centric roles, as well as good people skills, while they must be very good at active listening to gain an in depth understanding of the needs of the customer.

As well as recruiting externally, HSBC will also fill some of the new positions through internal promotions, as the Group prides itself on having a robust programme to grow its own talent.“In terms of personal development, HSBC gives a lot to groom our people, develop and actually retain them,” she says. When employees are first hired, they go through a full onboarding process. Qiu explains that for the new Jade positions, her team has been working with their learning and development colleagues to create a bespoke Wealth Academy to enable them to excel in their new position.

But the training and learning opportunities do not end there. “We have an HSBC University that offers a lot of learning curricula. It is a mixture of classroom and online learning and on the job coaching,” She adds that the courses are tailored to enable talents to upscale their skills. For wealth planners this would include areas such as legacy planning or working with HSBC’s insurance teams to understand and be able to explain complex insurance policies to our Jade customers.

HSBC also supports its staff in obtaining country or global accreditations, such as becoming a Certified Financial Planner in Hong Kong. “When I was a Premier Relationship Manager in the UK, the bank sponsored me to get a degree in financial services, as my professional additional degree, and to become an Associate of the Chartered Institute of Bankers.

“This is an area where HSBC is excellent. They give us study days and exam days. It is part of the benefits package.”

Qiu has been with HSBC for almost 18 years, after being recruited to its Graduate Trainee programme in the UK. “The bank has been very supportive about my growth,” she says.

She is particularly grateful for the opportunities she was given to work outside of her home market after joining the International Management Programme. She says Jade Relationship Managers will be offered similar opportunities to work in different markets in Asia.

Qiu thinks there are other benefits to working at HSBC too. “As a global bank, we are actually taking a lot of best practices around work from different geographies and implementing them quite broadly across Asia.” These include policies around flexible working and remote working. “We have learnt that if we give colleagues a bit more flexibility around their hours they give so much more back to the organisation and the customers”.

HSBC also places a strong emphasis on diversity and inclusion. Qiu sits on HSBC’s Asia Pacific Balance Committee, an employee resources group that focuses on gender diversity in the organisation. HSBC also recently took part in an LGBT Plus Out Leadership conference.

“HSBC believes that diversity is of the upmost importance. We fundamentally believe that bringing more diverse candidates into the organisation will allow us to better understand the diverse needs of our customers,” she says.

Qiu thinks HSBC’s current expansion represents a good opportunity to people interested in joining the bank. “The package is excellent, with rewards for Jade directors on a par, if not better, than for those who are managing portfolios at some of the more mass-end private banks, and the development plans are really spectacular,” she says.

It’s happened. If you work for Deutsche Bank and you believed all the stuff from Christian Sewing and James Von Moltke about this year’s bonuses being as generous as last, you have been revealed as the sort of incorrigible optimist who thinks a No Deal Brexit would be a blip on the road to nirvana.

The Financial Times today quotes some unnamed investment bankers at Deutsche who say bonuses for 2018 will in fact be “significantly down” on last year, with some areas seeing drops of between 15% and 20%.

If you’ve been paying attention, this should come as no surprise. Irrespective of performance in the fourth quarter, Deutsche Bank was always going to have problems paying bonuses this year. The charts below explain why.

CEO Sewing and CFO Von Moltke have been hamstrung by their unwavering commitment to keep costs across the whole of Deutsche Bank below €23bn for 2018.

As the first chart below shows, expenditure at Deutsche actually increased in the first nine months of 2018 – to €17.8bn from €17.7bn one year earlier. This unfortunately meant that if Deutsche Bank wants to meet its full year cost target of €23bn, it could only spend €5.2bn in the final quarter. But…..in the final quarter of 2017, Deutsche spent nearly €7bn.

In the final three months of 2018, Sewing and Von Moltke therefore needed to cut costs by 25% compared to the final quarter of the previous year.

If you work in the corporate and investment bank (CIB), this should always have filled you with dread. This is because – as the second chart below highlights – the fourth quarter is key for accruing bonuses at DB.

In 2017, Deutsche ramped up compensation spending in the CIB by nearly 40% year-on-year (to €1.3bn) in the final quarter after it decided to normalize the bonus pool and compensate for its decision to not to pay performance bonuses for 2016. With almost no bonuses paid in 2016 and comparatively generous bonuses paid in 2017, it’s safe to assume that most of the extra €366m spent on compensation in the corporate and investment bank in the Q4 2017 went to the bonus pool.

In 2018, however, Sewing and Von Moltke found themselves having to cut costs across DB by 25% in the final quarter, and the investment bank’s bonus pool was always going to be the prime target. Anyone who thought Deutsche’s senior executives were going to repeat 2017’s generosity was ignoring reality.

There is some good news. Front office headcount at Deutsche was down 5% at the end of September 2018 versus the end of September 2017, so there are fewer people with a claim on the pot.

However, even though overall CIB headcount (for back offfice and front office staff) was barely down in the first nine months of 2018, we’d suggest that Sewing and Von Moltke will be looking to cut spending on pay at the corporate and investment bank by at least 5% to €4.1bn for last year. This too implies that 2017’s Q4 pay bonanza won’t be repeated. For a lot of Deutsche Bank staff, therefore, 2018’s bonus payments could be horribly reminiscent of 2016’s. Sorry to break the news.

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Digitisation and the rapid adoption of new technology has changed the financial industry and the way it serves its clients. Notably, the digital customer journey has grown in importance and banking is being redefined. As Citi continues to transform digitally, it is also building up a next generation of bankers who are digital natives with a passion for innovation, to play a pivotal role in shaping the future of banking.

Citi sees these next generation digital natives as critical enablers in helping the firm drive innovation and grow. Lee Wei Chen, who joined Citi’s Consumer Graduate Programme this year, says: “Citi is very forward looking and innovative. There is a constant push to be ‘client-obsessed’ so that we continually come up with new ideas to meet their needs.”

He adds that the bank values the contribution of employees like himself who have just graduated from university and is new to the banking industry. “I got my first iPhone when I was 16 and since then I have been immersed in technology. I believe we can see things from a user perspective and offer insights.”

Zhang Yu, who joined Citi in 2014 on its Cross-Franchise Graduate Programme with a consumer focus, agrees that the bank has always encouraged input from its next generation employees. She remembers that when she joined, the graduate trainees were encouraged to be part of task forces that used technology to help solve some of the issues Citi faced.

“Our task was to pick a line of business and consult the business manager about a specific business problem, then use digitisation as the means to solve this problem.” Their goal was not just to conceptualise an idea, but also to prototype the solution and present their work to the senior management team.

“They actually value ideas from younger employees who have just joined the bank fresh out of school,” she says. Citi encourages and rewards innovation among its staff through various initiatives, including a staff hackathon in 2017 and regular internal awards to recognise digitisation efforts such as projects to unlock the power of data.

There was also the Citi Mobile Challenge, an industry-wide hackathon in 2015 involving collaboration with external players such as FinTech developers from the wider financial ecosystem. Zhang remembers taking part in the event, where Citi opened its suite of APIs for participants to explore solutions to reshape the mobile banking experience.

“I was project manager and I was exposed to many meaningful discussions. It was my first exposure to customer experience design,” she says. “It is how I started my journey working in digitisation. It was a life-changing experience.”

Today, Zhang works in Citi’s credit card and personal loans business, where she is a digital product specialist, helping the bank’s digital customer acquisition channels gain traction. One project she has worked on involves customers being able to sign up for credit cards while they are shopping online at partner websites.

She explains that Citi has integrated its system with MyInfo, the digital personal information repository managed by the Singapore government, meaning sections of the form can be auto filled in after customers use their SingPass to authorise sharing their data. Such digital innovation makes banking much more seamless and have come to be what customers expect.

Han Kwee Juan, Chief Executive Officer for Citibank Singapore Limited, says: “As customers increasingly demand new digital experiences, to truly understand customers’ needs will require the best digital native talents who have a passion for banking and making banking relevant, convenient and remarkable. It is essential that our employees are comfortable with data and technology and adapt our approaches with the fast-changing financial landscape. At Citi, we encourage a culture of curiosity and boldness so that our staff are empowered with a future-ready mindset to continuously experiment and innovate.”

Zhang says she initially wanted to work at Citi because she was told its graduate programme was the best in the industry, adding that the experience has always lived up to her expectations. During the programme she rotated through seven different departments and had a total of nine different managers. Wherever she was working, she says she was encouraged to speak up and use her initiative.

“Citi has a very open culture. I never had an issue openly discussing my thoughts with my managers. “I could raise concerns and propose solutions and, if they were reasonable, I would have their full support in getting my ideas implemented.” She adds that the rotation programme not only provided her with technical and soft skills training, but it also helped her to build up a network around the bank.

Lee is doing a more recent version of the Consumer Graduate Programme, which involves two six-month rotations and a year-long one. He says: “I believe rotating through different departments helps us to get a deep dive into the different aspects of the bank and gives us a macro picture of how all the different departments are linked.

“It actually helped me to understand a lot about the bank in a very short time. ”It is not only employees on the graduate programme who benefit from training, with Citi also placing a high emphasis on lifelong learning and ensuring all of its staff have the skills they need to succeed in the evolving financial landscape.

Han says: “Technology has dramatically accelerated the pace of change in the financial industry, and digital disruption will be an enduring phenomenon. As a result, the role and required skills of a financial professional may transform several times over the course of one’s career. Bankers must be prepared to continually reinvent themselves, while financial institutions must provide the necessary support and environment to foster professional growth.”

Zhang explains that there are a lot of opportunities for people to change teams and work on different assignments. Under Citi’s “2+2” career programme, an employee who has spent two years in a team can request to work in a different area of the bank to extend their own skills and experience. If the prospective manager is open to bringing this employee onboard, the current manager has to release him or her within two months.

“This shows the support from the organisation for employees to have opportunities to learn and have different exposures as they develop,” Zhang says.

Lee agrees: “There will never be a dull moment where you are doing the same thing for three to four years and there is not much change in your job. An organisation of Citi’s size and scale also provides a lot of opportunities to gain valuable regional or global experience.”

The bank’s Core Consumer Banking Skills training, which is accredited by Institute of Banking and Finance, provides online, self-paced learning to enable employees to gain the skills they need to succeed in the digital era. Citi has also recently rolled out the Professional Conversion Programme, which helps staff remain up to date in the digital economy and enhance their career progression.

Although it has been just a few months since Lee embarked on his career with Citi, Lee says he already has experienced “the forefront of what the future of banking will look like”.

To those thinking of joining Citi, Han says: “Anyone embarking on their career with Citi today will have the opportunity of a lifetime to be a change maker and create the future of banking.”

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