Wharton Journal

Issue date: 11/2/09 Section: Perspectives

Editor's note: We're excited to run an article by a Wharton alum - we see it as a great way to build links between current students and Wharton alumni.

PLS NOTE:  THESE ARE MY PERSPECTIVES AND PERTAIN TO MY EXPERIENCES WITHIN LEHMAN/WALL ST./ THE FINANCIAL SERVICES INDUSTRY IN THE US

Some of us were recently at the ‘one year after’ memorial, rabidly pontificating (yet again) on ‘why Lehman’, when someone happened to ask me a rather pertinent question (which I suspect I should have asked myself a while ago). So – she continued ‘which aspects of your personal life have been most impacted by the meltdown; and do they have more far-reaching implications? That set me thinking and here are three that come to mind; along with a summary of key takeaways

Lifestyle:

I really do believe that the era of the ‘up-swingers’ may be in the past. The notion of articulating the ‘wants’ and having the ‘means’ fall in place very quickly through either lending institutions or large sign-up/year-end bonuses is perhaps no longer going to be the case. This is likely to manifest in every aspect of personal choice, from the size of the mortgage one had accessible (and therefore the kind of home one aspired to), to the level of thought one needs to put into long-term expense planning like retirement, school and college funds for kids; to simple consumption decisions like the car/home decor to purchase or the next high-end restaurant to check-mark.

The notion of rolling over credit to a time when there will be a windfall that will pay out the debt is being severely challenged. And we are seeing folks go back to (what might seem obvious) first making money before it can be spent. The credit crunch is real, and here to stay for a while. So whether it is credit card spending limits, or refinancing/rolling over credit, or interest rates being as low as I was accustomed to – all of these will have to be revisited. We do live in an (at least temporarily) altered world of back-to-basics.

Attitude:

Within my professional circles there has been a growing cognition and (sometimes reluctant) acceptance that one needs to reprioritize one’s life in order of importance. At a time when all wealth disappeared overnight for me, the only thing that stood steadfast was the meaningful relationships with family and friends that I had nurtured through a lifetime. This serves as a (not so) gentle reminder to the difference between real and ephemeral, and a humbling understanding of how evanescent material success may be.

So the biggest attitude shift I’ve noted in myself is a more informed and healthy respect for ‘consequence’ and what ‘risk’ actually means; and a tempering of decision-making from purely ‘aspiration-led’ to more thoughtful and circumspect.

The manifestation of this personal change can be noted across the board from how mortgage companies are doing their due-diligence, to how people are making their consumption & investment decisions, to how they want to apportion their time between work and family. I recently learnt that one of my smartest Managing Director friends had moved from New York to Missouri to balance out life. This was really quite a shock for me initially - and would scarcely have been in the realm of the possible just two years ago.

Family:

While I do understand numbers, and also (hopefully) have a realistic perspective on how to stabilize financially over the long-term, my family, in many ways, continues to be overwhelmed by the sheer magnitude of the personal and financial losses resulting from this meltdown. It is simply incomprehensible for them to understand the notion of losing pretty-much everything overnight, and having to start afresh when one would expect to be at the acme of one’s professional trajectory. While I do find family to be more empathetic, thoughtful and kind than I have ever experienced before, there is always this lurking essence I get that some credibility has been lost. Alongside, I also find folks being a lot more restrained in their consumption habits, much more thoughtful about core vs peripheral needs, and sometimes (perhaps) even more cautious & curtailed than necessary in decisions of relative insignificance -  which I assume is the natural outcome of any significant trauma.

Then there is the case of my colleague - a senior professional who last worked at the largest wealth management firm in the world. Given his age, and compensation, it was hard to replicate the job that he lost, and so out of sheer grit and the want to contribute – started to manage a large grocery store, 30 miles away. He now works 12 hrs a day, 6 days a week; earns a fraction of his halcyon pay, so as to continue to pay his monthly mortgage; and is frustrated by the (lack of?) intellectual engagement from the workforce he manages. And his wife and two kids (both in college) bleed silent tears of deep empathy, for the driven bread-winner, closing in on 60 years of age, who will just never give up.

 Key Lessons:

There have been three key lessons for me through this whole experience:
1. Grandma’s tales are real: Build a life on sustainable principles - earn before you spend, give as much thought to risk as to reward, follow through on what you are genuinely passionate about; and invest in relationships of consequence and not material things, for only those are likely to withstand most dislocations.
2. Focus on fundamentals, not trends: Whether it is about the area of study you choose, or the home you buy or the career-choices you make, some things are better built to last - focus on those. Momentum feels good on the way up, but it’s a long way down from the top, and unfortunately momentum works the other way too.
3. Have value for today: A lot of us worked 100 hr weeks, even though we didn’t really need to, in the hope of a pot of gold leading to a better tomorrow. Well – that bonus is never going to be for a lot of us. And some of us are left wondering how that kid of ours grew to be five years old, and where those in-between years went. Therefore live each day fully and have value for today – don’t trade it off purely for a more exuberant tomorrow, for that may really never be.

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