Leonardo DiCaprio in the Wolf of Wall Street: today’s young financiers rightly take a more cautious approach. (Photo: Universal)
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Far from the Wolf of Wall Street: how did young people become so risk averse?

Today’s bankers have replaced the excesses of the 1980s with Excel spreadsheets and PowerPoint presentations.

A job in finance was once seen as a ticket to early security and a glamorous lifestyle, but that is not the picture that emerges from a new book, Young Money: Inside the Hidden World of Wall Street’s Post-Crash Recruits, by Kevin Roose, a journalist at New York magazine. The eight entry-level bankers Roose profiles are too busy and tired for the kind of high jinks shown in Liar’s Poker and The Wolf of Wall Street. They’re checking their BlackBerries around the clock, eating three meals a day at the desk and running to the office in the middle of the night to correct typos for tyrannical bosses. The excesses of the 1980s are gone, and they’ve been replaced by Excel spreadsheets and fussy PowerPoint presentations. “Among the young bankers I interviewed,” Roose writes, “I saw disillusionment, depression, and feelings of worthlessness that were deeper and more foundational than simple work frustrations.”

Yet you could replace “bankers” with any number of professions and that sentence would ring just as true. Leaving the safety and structure of college and embarking on a career can trigger an existential crisis in even the most pragmatic and well-adjusted person, and the problems plaguing young financiers – long hours, menial tasks, demanding bosses – will sound familiar to young professionals far outside the world of finance. Junior doctors work 100-hour weeks. Young academics get shunted from university to university as adjuncts. Aspiring journalists get caught in a cycle of short-term internships. Roose thinks he’s written a book about finance but in fact it’s a book about a generation.

Young people today are acutely aware that competition for jobs has gone global. They worry more, plan their lives sooner and even party less hard than their parents. In 1980, more than 40 per cent of Americans in twelfth grade (aged 17-18) said they’d had a drink in the previous month; in 2011, that figure was closer to 20 per cent. NHS statistics show a similar pattern in the UK.

Financially, millennials are more risk-averse than any other age group other than their grandparents. In January, the UBS investment bank published a study of over 2,500 investors showing that millennials – defined here as 21-to-36-year-olds – are among the most financially conservative Americans: 13 per cent of millennials classified their own risk tolerance as “conservative”, compared to 6 per cent of respondents from Gen X (37-48), 10 per cent of baby boomers (49-67) and 15 per cent of the 68-plus crowd.

The reasons for millennials’ economic caution aren’t a total mystery; coming of age during a recession would leave anyone wary. But it’s not just in the realm of personal finance that young people prefer to play it safe. We are risk-averse when it comes to our professional lives, too. The labour market has opened up, and bankers in New York are competing with financiers in London, Singapore and Hong Kong. Journalists are in competition with everyone else who’s on the internet.

Wall Street recruiters know how tempting it is for students to hear they’ll have a job lined up by the time they head home for Christmas of their final year. Roose writes that banks “have become extremely skilled at appealing to the anxieties of overachieving young people and inserting themselves as the solution to these worries”. They advertise two-year programmes for new recruits, promising not only high pay and prestige but also the opportunity to learn skills that can be transferred across other industries. Should young analysts decide finance isn’t for them, they’re told, they’ll have their pick of the jobs at hedge funds, private equity firms, tech start-ups or non-profits.

For high achievers who see their lives as a series of lines on a CV, banking can seem like a path of least resistance, a way to postpone tough decisions. I know how seductive this is. I went to one corporate recruiting event at university, because why not? It promised free drinks at a nice restaurant and I was sure I could avoid the suits. I ended up halfway through an application for Credit Suisse’s graduate scheme before I remembered I had no interest in finance.

As often as you see people choosing between Goldman Sachs and Morgan Stanley, you see students struggling to decide between applying to McKinsey and Teach for America. Earning £70,000 in New York and teaching in some of a country’s most deprived schools might seem like opposite trajectories, but they appeal to the same sensibility. Both offer set paths, structure and a limited time commitment. Millennials are addicted to structure – and paralysed by fear of falling off the treadmill.

This article first appeared in the 05 March 2014 issue of the New Statesman, Putin's power game

Photo: Getty Images
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How can Britain become a nation of homeowners?

David Cameron must unlock the spirit of his postwar predecessors to get the housing market back on track. 

In the 1955 election, Anthony Eden described turning Britain into a “property-owning democracy” as his – and by extension, the Conservative Party’s – overarching mission.

60 years later, what’s changed? Then, as now, an Old Etonian sits in Downing Street. Then, as now, Labour are badly riven between left and right, with their last stay in government widely believed – by their activists at least – to have been a disappointment. Then as now, few commentators seriously believe the Tories will be out of power any time soon.

But as for a property-owning democracy? That’s going less well.

When Eden won in 1955, around a third of people owned their own homes. By the time the Conservative government gave way to Harold Wilson in 1964, 42 per cent of households were owner-occupiers.

That kicked off a long period – from the mid-50s right until the fall of the Berlin Wall – in which home ownership increased, before staying roughly flat at 70 per cent of the population from 1991 to 2001.

But over the course of the next decade, for the first time in over a hundred years, the proportion of owner-occupiers went to into reverse. Just 64 percent of households were owner-occupier in 2011. No-one seriously believes that number will have gone anywhere other than down by the time of the next census in 2021. Most troublingly, in London – which, for the most part, gives us a fairly accurate idea of what the demographics of Britain as a whole will be in 30 years’ time – more than half of households are now renters.

What’s gone wrong?

In short, property prices have shot out of reach of increasing numbers of people. The British housing market increasingly gets a failing grade at “Social Contract 101”: could someone, without a backstop of parental or family capital, entering the workforce today, working full-time, seriously hope to retire in 50 years in their own home with their mortgage paid off?

It’s useful to compare and contrast the policy levers of those two Old Etonians, Eden and Cameron. Cameron, so far, has favoured demand-side solutions: Help to Buy and the new Help to Buy ISA.

To take the second, newer of those two policy innovations first: the Help to Buy ISA. Does it work?

Well, if you are a pre-existing saver – you can’t use the Help to Buy ISA for another tax year. And you have to stop putting money into any existing ISAs. So anyone putting a little aside at the moment – not going to feel the benefit of a Help to Buy ISA.

And anyone solely reliant on a Help to Buy ISA – the most you can benefit from, if you are single, it is an extra three grand from the government. This is not going to shift any houses any time soon.

What it is is a bung for the only working-age demographic to have done well out of the Coalition: dual-earner couples with no children earning above average income.

What about Help to Buy itself? At the margins, Help to Buy is helping some people achieve completions – while driving up the big disincentive to home ownership in the shape of prices – and creating sub-prime style risks for the taxpayer in future.

Eden, in contrast, preferred supply-side policies: his government, like every peacetime government from Baldwin until Thatcher’s it was a housebuilding government.

Why are house prices so high? Because there aren’t enough of them. The sector is over-regulated, underprovided, there isn’t enough housing either for social lets or for buyers. And until today’s Conservatives rediscover the spirit of Eden, that is unlikely to change.

I was at a Conservative party fringe (I was on the far left, both in terms of seating and politics).This is what I said, minus the ums, the ahs, and the moment my screensaver kicked in.

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.