So, you want to work on Wall Street?

KNOWING WHO'S REACHED THE TOP MEANS little if you don't know how to get there yourself. With that in mind, BLACK ENTERPRISE invited four managing directors from four major investment banking firms to a private dinner to discuss the myths and realities of life the Street for black professionals.

To ensure a candid, detailed and honest discourse, we kept the group small and assured them anonymity. Thus, the names you'll read below are fictitious, but their stories and opinions are as real as it gets.

BE: Characterize Wall Street's commitment to bringing African Americans into line positions on the Street.

CHARLES DEAN: The firms are tripping over themselves to create awareness, particularly with the kids coming right out of college. But the attitude is that once we make the opportunity available to you, we've done our part, and now it's incumbent upon you to navigate the waters that will get you to managing director in eight or 10 years.

RICHARD SHEPHERD: We all recruit at historically black schools now, and are enamored of SEO [Sponsor for Educational Opportunity Investment Program, which targets promising minority students for Wall Street slots; 212-979-2040], which is a tremendous feeder to the Street. But SEO is so good that it hasn't forced these firms to be more creative. They've had success in hiring and are very happy with the universe of people that they get [through SEO], so they tend to go back to that well. It was correctly stated that at the 22-year-old level, there's a lot of enthusiasm. But what about the 32-year-old level? When I look at the numbers of people ascending up to director's and managing director's positions, they pale compared with the numbers who come in and either don't make it or opt to leave.

CRAIG IVY: Some of it's statistical. You're recruiting at historically black colleges for such a short period of time, and a lot of the mentoring networks are established through the alma mater. So when a young Duke recruit comes in who happens to be Caucasian, there's typically a huge network of people [from his college] who've been there for 10 or 12 years. There aren't too many Howard graduates who have had that opportunity, so for them the uphill battle is much tougher.

DEAN: I don't care what color you are, the chances are you're not going to make it to the top.

SHEPHERD: The pyramid is naturally narrower at the top. That's just the nature of the industry.

IVY: But again, some things are statistically apparent. For instance, I'll bet you that less than 7% of the managing directors at your firm are black.

DEAN: Much less than 7%. There are three.

ALLEN THOMAS: At my firm we're 2%.

DEAN: We're just three, as in one, two, three.

IVY: At some firms, it's less than half a percent.

THOMAS: Things don't change unless people really want them to change. It's almost a culture shock that must take place in some of these firms to really adopt what is right. My firm has basically bought into diversity but has been deficient in executing it. We have to, and for the same reasons that the municipal markets accelerated black people into that field: because a lot of the mayors, like Andrew Young, said, 'Don't send any white people down here to do my deals. I want to see people of colon' Look at some of the major pension funds that we look to for business. They not only have black people helping to make the major investment decisions, but they're also helping decide how and where to raise money. Look at the boards of directors of major corporations and universities, and look internationally. You can't very well present a lily white face in some of the developing countries.

IVY: The question we are all asking is, How much progress has been made? I can't sit down and give you the numbers and tell you a precise answer. But I would deduce that not much has been made, even with all of the so-called enthusiasm.

DEAN: Progress has been made but it's nothing to brag about.

THOMAS: Wall Street went through a dip cycle where a lot of people got laid off. But now, we're exploding in terms of growth. That has brought more people on a producing line but the attendant increase of minorities on Wall Street isn't there.

SHEPHERD: On a percentage basis, it's been dismal.

THOMAS: On a percentage basis, our firm has gone down.

IVY: The biggest problems originate from the chairman's office, frankly, or close to the chairman's office. I'll give you a story. There was a period when the chairman of my firm reached down and took an interest in a mentoring relationship with me, and suddenly there was a whole lot more mentoring going on with other black professionals at the firm. This wasn't just a case of coming around the desk every five weeks and saying, How are you doing? This was what really happens in a full mentoring relationship: it's both inside and outside the office, teaching life lessons, teaching business lessons. When he left the firm, there was still a lot of enthusiasm and a lot of talk about diversity and committees. But there weren't as many mentoring relationships between the top office and people of color down the chain. Eventually, there was a notable lowering of the enthusiasm about the whole diversity effort. So I think that the commitment has to be expressed at the very top. It can't just be talking and building committees--

THOMAS: . . . committees that are usually chaired by people of colon..

IVY: People have to see the chairman, the CEO and the CFO take on these relationships personally and visibly.

DEAN: I agree completely that a very meaningful mentoring relationship is important; whether or not it's absolutely critical, I don't know. To use a math phrase, having solid relationships with very important people within the firm is probably a necessary but not sufficient condition for getting to the top.

Because the investment banking business sort of reshuffles the deck every year--you get paid and then you start all over--it's quite different from corporate America. And so, while you may have good relationships and play golf with the chairman, two or three years without the revenues next to your name and you can only go so far. That's just the nature of the business.

THOMAS: In the firm where I started, the chairman was a very active recruiter. He had the philosophy that if you can deliver a client base or a P&L that's superior to the next person in line then I don't care what you look like because it's about money. Theoretically, Wall Street is a meritocracy. So, if you can do what it takes to excel, to deliver, to produce, you're going to get the nod--at least, in theory.

SHEPHERD: Wall Street is a results-oriented business, no question. But I don't think any Wall Street firm is really looking back and saying, We've got 300 managing directors and only one African American. I don't like that. Let me communicate that to my senior managers, and see if we can improve on that.

IVY: If you are really a meritocracy, and the population [of African Americans] in firms is whatever it is--say 5%, 8% or 10%--it's statistically aberrant to have a half to one percent in the top ranks. It can't be just a pure meritocracy.

BE: What do people have to know to get in the door, then move up the ladder?

DEAN: I grew up in the inner city. That can be viewed as a real plus, in terms of your ability to be hungry, your desire, your determination, your willingness to commit, as opposed to having been brought up in a country club world where everything has been given to you. You get some traders who interview potential employees, and nine times out of 10 they take the hungry kid.

SHEPHERD: Investment bankers would take that kid too.

DEAN: Exactly. But when I went for my interview as a 21 year old, I said the same thing to the Wall Street recruiters as I did to the corporate folks. I had no idea what investment banking was. So, I would say that a white kid may come across as a little more polished and have a better feel for the talk, if you will, during the interviewing process.

THOMAS: I was like you, Charlie. When I went for my interview, I was trying to figure it out, saying to myself, Now what sounds right? But I don't think they were looking for what I knew. They were looking for something more fundamental. When I interview people--black, white, whatever--I tend to ask one question: Assume the job candidates all have great mathematical and technical skills and great backgrounds--including schools--what separates you from the rest? When I started out, I wasn't smarter and more mathematically capable than my peers. But if there was some concept that I didn't quite understand, I would take the book home and read it and ask questions and work on it until I figured it out. To this day, if you look me dead in the eye and ask, How do you separate yourself from all those people who presumably share your qualifications, I answer that I can outwork them. So, who do you want on your team? Do you want somebody who is going to kick butt and work harder than anyone? Or do you want somebody who maybe has a touch more calculus? Because I'll be better than them in calculus, if you give me the opportunity. If you're looking for something that gives you an edge, that gets you the chance to be considered for the next big account or the next best assignment, you outwork them. It's something that puts everybody on an equal playing field.

DEAN: If you're an analyst or a first-year associate, you need to understand there is no grace period. You need to hit the ground running on day one. There's no training program per se on the investment banking side. There may be a week or so where they give you an introduction to different parts of the business, but for the first year or so, it's really up to you to demonstrate technical confidence, enthusiasm and energy. If it means pulling three all-nighters, and then asking for more, that's what you've got to do. In the first couple of years, it's somewhat objective. There's no way to fake the technical part. You're either very proficient at modeling and dealing with questions that relate to the capital asset price of a model, or you're not. And if you sort of BSed your way through college or business school, then you're not going to make it.

Typically that's not a problem for the black kids. They are very, very sound technically. But a lot of them don't appreciate the endless amounts of energy and enthusiasm that are required. If they're there until 11:00 p.m., they might think that's fine, where another kid may be there until 2:00 a.m. I think in the first two or three years, you just have to be a pack mule, able to endure a tremendous amount of work without any kind of obvious pat on the back or appreciation. But the energy only takes you so far. Mentoring is probably too strong a word, at least when I think about my firm. But you really do need somebody who is senior and respected within the firm tO make sure that you're getting the right assignments and exposed to the right kind of clients--and then, after awhile, it all begins to feed on itself.

IVY: On the banking side, the assignment issue is very important. It's one thing to produce but pursuing relationships aggressively is something that we need to do a little harder, because--although there's no hard evidence for this--the selection process may be biased against us. The best way you overcome that is by making sure that you interface with enough people that know your skills. There aren't too many black folks in capital commitment roles on the

Street. That's a very technical role. Part of what keeps those numbers down is a tendency to question the quantitative skills of African Americans. Specifically, I was drawn to the Street, and the industry was attracted to me because of my quantitative background. Very early on, I demonstrated exceptional skills. But in my fourth-year review, they still were questioning why and how. It wasn't until years later that they had to finally admit, Gee, this guy can do calculus. It must be that.

SHEPHERD: You've got to learn the ways of your firm. It's not written down, and you better understand how to get it. We're looking at who is quick on the uptake, who can get to point A then to point J, fast. That assessment happens from day one. Once you are labeled...

DEAN: Once somebody calls you a f--up, forget it.

SHEPHERD: . . . then you're swimming upstream. You don't get the right assignments and nobody wants to work with you.

THOMAS: There's something else I have to bring up in terms of what can knock you off course. I've seen talented people who have been successful to a point, then they sell out. By that I mean, maybe someone makes a political crack that they don't quite agree with or an off-color joke but they go along with it because they want to be part of the club. Those people ultimately are crushed. I have seen people who are Stepin Fetchits, and look like they're accelerating, and then boom--they're gone. They couldn't command the respect.

BE: Are there fundamental advantages or disadvantages to being black in your industry?

THOMAS: As a black person in a large, predominantly white, corporation you have a spotlight on you. If you're really good, better than the people sitting on either side of you, the spotlight is going to amplify that. If you're bad--or just not as good as other people--the spotlight is going to amplify that too. Some white people's negatives will be missed, or overlooked for a while, simply because that light is not on them.

SHEPHERD: In other words, if you are good, you may get what you deserve, but if you're average, you'll certainly not get the benefit of the doubt.

BE: Why should someone considering job offers in several lucrative areas opt for a career on the Street?

THOMAS: One of the questions that we all ask our summer interns is, What's your motivation? What drives you to want to go to Wall Street? One of my colleagues told me that when he asked this year's interns, none of them answered money--not even sneaking it in there skillfully so as to not sound so greedy as they did in the '80s. Instead, they talked about 'fun' and 'fulfillment.' The business schools have moved to redirect some of their very talented, smarter people into more fundamental businesses--manufacturing and things where you can answer the question, What are you really producing? They have reshaped people's thinking, and maybe rightfully so, to focus on, What do you really want to do?

DEAN: It may be etiquette, Al.

THOMAS: There was no etiquette in the '80s. 'Money' was the right answer in the '80s.

SHEPHERD: What about the people who have been in the business for a while? What's their motivation?

IVY: I want to address it another way: What's the motivation for people who are successful? If you look at the most successful people in sports, they're the ones who like to win the most, and end up making the most money. So the fact that the money is there is an offshoot of the motivation. I don't think [Michael] Jordan ignores the fact that he can get paid x million dollars a year when he's taking that jumper, but I think he likes making the jumper, and he continues to like to make it. The people I see as the most successful in this business like what they do. Is the money part of my motivation? Yes. And it's also a measure of how I'm doing my job, but it's not why I like my job.

DEAN: I made under $20,000 starting out. Now analysts start at about $150,000.

THOMAS: I don't care what we all say around this room, we came into this business to make money.

DEAN: And they still do. That is why the industry is losing people to consultancy. The first choice [for people aspiring to a career in finance] is private equity. They can make more money while working less.

SHEPHERD: I think that individuals are attracted to Wall Street for its environment. It's about the desire to win. There's a subtle litmus test when we interview somebody: Does this person really want to be here? Do they know all of the characteristics that you need to survive here? And when people are comparing all of those other job options, I think there's a clear subset of those who are going to say no to Wall Street.

DEAN: But the question was, What advice would you give that kid?

THOMAS: I can answer this one. Every morning you wake up and get out of bed and you've got to either want to go to work, or not. I tell you, the majority of times, I really want to.

DEAN: But our competing industries are going to say the exact same thing.

THOMAS: I hear you but let me tell you: What drives me is that in the morning, I walk in and I'm competing at the highest level in a very dynamic environment. I'm playing a new team. I'm playing against x company, z company, y company, all competing for the same thing. Constantly changing markets make it a new day every day. You can be entrepreneurial, and that's important. Second, you have the opportunity to be on the winning team. You can be the person who, at the buzzer, takes the last shot and becomes a superstar. And sometimes, you're going to be the person who, in the last three seconds of the game, passes the ball to the person who makes that shot, so you have a support role and--boom--your firm won. That to me is great.

SHEPHERD: Yeah, but you have to want the ball.

IVY: Absolutely. And if you're not that type of person, this is not for you. If you're the type of person who would go out and start your own company with your own money, you would probably be more disposed to this industry versus some other.

BE: When will you know it's time to retire?

DEAN: This is not an industry where you see a lot of 55-year-olds. You see almost no 60-year-olds. Most senior management, at almost every firm, will be in their 40s. It's a young business, and that's because people work very, very hard for 20 or 25 years and then burn out. More importantly, you can't ignore the fact that if you stay in the industry that long, you'll have enough financial security to say, Let's go do some other things.

SHEPHERD: When you get to our level, you should have made enough money so that you can walk away saying, I had a good run on Wall Street. You spoke about waking up every morning and being inspired to face all of the pressures that one has to deal with on the Street. To me, that has always been the big barometer. I like what I do. I get up every morning and I want to go to work. I like the competition, working on the hard deal to beat the competitive firms, and I get joy when we do that. When I don't do it--because you don't win all the time--I want to get back into the batter's box to do it again. So to me, the whole thing has been, Do you still like it? But you have to be able to deal with the lack of job security on the Street. Every year it's a new deal, and you got to be ready to deal with that. If you can't, then you need to get out--and they'll put you out real quick if they notice that that fire isn't there.

IVY: When I think that I'm getting in the way of the people that I'm grooming, it's time for me to get out. When I don't feel that intellectual aggressiveness anymore-to solve the problem faster and more--competitively than my counterpart across the street--it'll be time to go.

THOMAS: I have a question, What do you fear most in your career?

DEAN: I don't fear anything. I mean, I don't have 'f-- you' money, but I don't fear anything.

THOMAS: Put it as a two-part question: How high do you want to go, and how high do you think you can go?

IVY: I know how high I want to go: As high as it goes, okay? But I have a concern that because I'm not part of the majority, and because I have a long career left and a huge amount of ambition, that there may be some sociological bias involved. That's my concern, and I fight hard about it every day. When people come in for a preinterview, and they want to tell me how smart they are, and this and that, I always encourage them to provide evidence of it. Prove it, document it for me, demonstrate the difference they have made in a situation and the difference they can make in the organization. I spend a lot of my day trying to do that, show evidence, and it's related to some of that concern.

THOMAS: I truly believe that I have the ability to run my firm, and I would want to. That's the first part of the question, but my answer to what I fear most in this business is what Craig alluded to. I am what I am. I'm black . . .

SHEPHERD: But you said that Wall Street was a meritocracy.

THOMAS: No, I said, 'theoretically'. . .

SHEPHERD (smiling): I stand corrected.

THOMAS: Absolutely. I know you jumped on me a little bit and I was going to clean it up. I know what the deal is. It's not a true meritocracy. It should be but it's not. My biggest fear is that I will not be able to achieve the level that I think I should--and would---if I had a pure shot at it, because of my race.

DEAN: I think everybody would love to have the opportunity to run their firms. I just don't think anybody would be totally truthful with you if they say otherwise. I do think that I could run my firm one day, and I'm not prepared to dismiss that right now. On the one hand, I can make the argument that that's a very naive assertion. On the other hand, I can see a very logical scenario that would get me there.

SHEPHERD: I don't know if I have ever really thought about running the firm that I work for. That's because I've always looked at those positions as being more stressful, and requiring more of a commitment of time, effort and energy than I really want to put in. I would like to believe that I could run it. I think I'm smart enough but as to whether I'd get the chance if I wanted it, I'm not clear about that, for the same sociological reasons the others have raised.

BE: Should your children follow you into this industry, do you think their experience will be much different from yours?

DEAN: It won't be a problem for my daughter to get recruited, but it gets much more complicated after that. Nobody has figured out how to retain and advance women or minorities on Wall Street. Nearly half of our entering analyst class is female. But the percentage of women who make up our entering associate class is less than 20%, meaning that women analysts are simply saying that they don't want to do this. A lot of minorities say the same thing. The real challenge for this industry is figuring out how to convince black kids and women that this is something that you should just kill yourself for over a 20-25 year period, and then think about what you're going to do when you reach 45. So am I optimistic that our kids, across the board, will be more enthusiastic and have a greater chance of making it in this business? Not really.

IVY: Look, you sweat and work and sacrifice based upon the probability of getting a reward, and knowing the probable amount of that reward. But if you look out there and see only two black M.D.s out of 250, you might decide that this is not going to pay off for me in the same way as in the white population. So why bother?

DEAN: Do you think people really think like that? A certain Wall Street firm recognized by some as the premier investment bank in the world fired virtually all of their black people a year ago, and yet they had no trouble recruiting.

IVY: But retention is different. These are smart people. You can't ignore data. As long as the data clearly indicate it's not a fair game, people are going to make a rational pricing decision to take themselves out of it. When that selection bias goes away, then you'll see more of us staying in and reaching the top.

RELATED ARTICLE: WHERE ARE THEY NOW?

When the first significant numbers of African American recruits started entering the securities business during the late '70s and early '80s, Donald E. Smart was among the most promising.

The Stratford, Connecticut, native had a million-dollar resume: Harvard honors graduate [college, law and business schools); summer jobs in the international banking divisions of such companies as IBM and Chemical Bank; professional basketball player in Europe, a stint as an attorney at a white-shoe firm; and cultural interests that included classical music and linguistics.

Equally impressive, although not on his resume, is the fact that he forged strong ties with a few of the most powerful black politicians of the day--including Chicago Mayor Harold Washington and Cannecticut State Treasurer Hank Parker--by the time he joined Merrill Lynch as an associate in 1982. The municipal finance area was about to take oh, and he was on the launching pad. As one professional admirer succinctly put it, "He was the Man." But after two years, Smart was gone.

Rumors about what might have happened rippled through the young black community on the Street. One wild story speculated that Smart's high profile--he was once featured on the cover of Ebony--was more than his Merrill Lynch bosses could take, especially from a black man.

In truth, Smart left the securities business because he couldn't see fighting for his future there despite encouragement from within Merrill Lynch Even with his great credentials and substantial promise Smart believed that to succeed there long term, he d have to struggle every step of the way.

Like scores of others who were once drawn to Wall Street like moths to a flame, Smart did a risk-return analysis and decided, after consulting for a while, to return to practicing law. Now an international law partner with the Memphis firm of Glankler Brown, Smart says, "I opted out of investment banking because I saw where people were three-to-five years ahead of me. The nature of the game was obsessive, the stakes were high and the level of insecurity, astronomical. Some folks thrive in that kind of environment But it wasn't for me."

Every year, scores of professionals like Smart trade in the golden handcuffs for what they say is a more personally rewarding lifestyle. They find it most often in consulting, in raising their children, in less pressurized areas of finance or other industries, in launching their own companies and sometimes in smaller firms or regional offices where they continue to do exactly the same thing, but in a very different environment.

Several of those featured in BE's 1992 Wall Street list are among those who have left major firms in the last few years. Two have retired: Garland Wood, who at press time remains the only African American ever to have been named partner at Goldman Sachs, is now a limited partner at the firm; and Marianne Spraggins, who was once the only black woman managing director in a major New York firm (Smith Barney), is now an entrepreneur living in Scottsdale, Arizona. Marc Macintosh, a former managing director at PaineWebber, reportedly went into consulting, then left the country for a time. At press time, he could not be located.

A few others who left their firms didn't leave the business altogether but moved from the sell side to the buy side, thus making them ineligible for our list. George Haywood, formerly a senior trader at Lehman Brothers, is now director of corporate bond trading at Moore Capital Management in New York As a buyer of large blocks of bonds, he's now a client of many of the firms he once competed against while at Lehman.

Tracy Maitland, who was a star salesman of convertible securities at Merrill Lynch in 1992, left the firm last year to launch Advent Capital Management. The New York-based asset management firm, specializing in convertible securities, is a division of Utendahl Capital Management.

Although he is one of the many who left the Street altogether, Smart is discouraged that the numbers of African Americans still active in major investment houses "has dipped some from 12 years ago" But, he has the highest hopes for those who remain. "As long as there are African Americans in [the varioUs] areas of investment banking, then we'll continue to alter things, improve them and offer evidence that our presence is positive we can do this on the same level as anyone else."