The Path to High Finance: Advice for College Grads from a Wiser Parent

Much has been said about the skills and acumen required to succeed in high finance, but often overlooked is the importance of integrity and maintaining one's soul. Here are some insights from a parent who has been through life's ups and downs, and can offer valuable advice to a college graduate about to embark on a career in the financial world.

The Role of Finance in the Economy

Finance, though often regarded as an enabler of commerce and industry, can become a problem when its size and self-interests overshadow its original purpose. An article from The Economist highlights the potential pitfalls of excessive finance on the overall economy.

Warning: Too Much Finance is Bad for the Economy (Source)

The Classic Merchant Banker: A Model of Integrity and Dedication

The days of the classic merchant banker, someone well-versed in a specific industry, who invested and advised based on his reputation, are long gone. Back in the heyday, the merchant banker was a respected figure, deeply involved in every aspect of a business and ready to take on risks. He was a key advisor, not just a financier, ensuring the success of a project from start to finish.

For example, a merchant banker would invest in a new steel mill and not only offer capital but also secure payroll, finance sales, and even arrange shipping deals with railroads. This full-service approach was the hallmark of true integrity and dedication to the cause.

Modern High Finance: A Game of Arbitrage and Exploitation

Today, the high finance landscape has changed dramatically. Investment bankers no longer focus on solving real problems and creating tangible value. Instead, they engage in complex financial maneuvers and exploit the regulatory loopholes to maximize profits. While this may be more profitable, it falls short of the kind of respect and admiration that truly productive and ethically sound individuals earn.

Unlike the merchant banker, today's investment bankers often lack the deep involvement in the underlying business. They focus on trading securities, exploiting regulatory nuances, and making profits through high-risk, high-reward strategies, rather than through genuine, long-term investments.

Advising the Next Generation: What a Wiser Parent Can Offer

While it's important for parents to respect and cheer for their college graduates as they venture into the world of high finance, it's equally crucial to impart wisdom. This includes the recognition that success and failure are both essential parts of one's journey and that preserving one's integrity and soul is paramount.

Encourage your child to do the hard thing, the truly productive thing. By focusing on creating value rather than just making a quick buck, they will be happier and more satisfied in the long run. Teach them that ethical actions may not always yield immediate rewards but contribute to a better future.

Conclusion

As your child moves forward in their career in high finance, remind them of the lessons from the past. Encourage them to uphold the standards set by the classic merchant banker, who valued integrity and hard work above all. This advice will not only help them build a successful career but also a fulfilling one, grounded in ethical practices and personal integrity.

References

The Economist, 2021. 'Too Much Finance is Bad for the Economy'. Retrieved from: