A person walks through a terminal at LaGuardia Airport in New York on March 6. Wall Streeters are not only back at their offices, they are traveling again at a time when many other companies continue to keep their workers at home. Timothy A. Clary/AFP via Getty Images
Zoom calls and Slack chats don't cut it for Wall Street anymore.
At a time when many are still working from home, Wall Street dealmakers are not only back at their offices, they are traveling a lot again, to woo clients and negotiate mergers and sales.
It's not that the work can't be done from home: In fact, investment banks posted record profits during much of the pandemic, when bankers and traders were confined to their homes.
But Wall Street holds fast to tradition. It's an intensely competitive industry where advising on a single deal, or helping to take a company public, can bring in tens of millions of dollars in fees. And nobody wants to lose out to a competitor who proved their mettle by making the trek when others phoned it in.
"Even during the pandemic, if your clients were in Texas, if you didn't go down and see them, they knew you were a wimp," says Jonathan Knee, a senior advisor at the investment firm Evercore. "And they didn't want wimps working for them."
And although video conferencing has improved dramatically and made Wall Street more efficient, veteran dealmakers like Knee, who is also a professor at Columbia Business School, argue there is still no substitute for in-person negotiation.
During in-person meetings, Knee, who previously worked at Morgan Stanley and Goldman Sachs, pays attention to body language and look out for subtle clues.
When he asks tough questions about sensitive subjects, including compensation and sales targets, he is interested in the answers, of course, but he also wants to see how an executive reacts to the interrogation.
"You can do that on Zoom," Knee says. "But it's very hard to see the sweat dripping down their forehead."
People move through LaGuardia Airport before the start of the Fourth of July weekend on July 2 in New York City. Bankers say negotiating deals in person is usually better than through video chats like Zoom. Spencer Platt/Getty Images
Tests and quarantines: A look at pandemic travel
It's not that Wall Street banks are not cautious or health-conscious. The Delta variant has renewed concerns about infections, though not enough to shut down travel.
Investment banking is, after all, a client-driven business, and for Wall Street, FOMO — fear of missing out — is real, according to Vik Krishnan, a partner at McKinsey & Company.
A pivotal moment is when "you're in a competitive situation with a company that is looking to conduct a large, multi-billion dollar IPO, and it's not quite clear that you are going to win that business against your competition," he says.
All it takes is a single competitor resuming travel before everybody else feels compelled to join.
That fear is summarized in a sign that hangs in the lobby of Goldman Sachs's global headquarters in New York: "Don't let a day pass without client interaction – In person beats video, video beats phone, phone beats email."
James Davies, who heads the investment bank for the United States at Deutsche Bank, is a senior banker who is traveling again.
He took a three-week trip to the United Kingdom earlier this year to meet with clients and colleagues he hadn't seen in person for months. It was a different experience.
"I, despite having been vaccinated twice, was tested eight times," Davies recalls. "I had to quarantine in one place for five days when in London."
But all the headache was worth it, Davies says: There's nothing like establishing trust when meeting someone face-to-face.
"I think that is especially important if you are looking to actually sign a deal with someone," he says.
Flight information is shown on an electronic board at Ronald Reagan Washington National Airport on the eve of a Memorial Day weekend on May 28 in Arlington, Virginia. Though Wall Street is resuming business travel, they are being more careful about which trips they undertake. Alex Wong/Getty Images
But some things do change, even in Wall Street
Still, even Wall Street is making adjustments.
Travel is much more targeted, and meetings that can be taken over Zoom or video are still part of day-to-day reality. Banks have also made commitments to reduce their environmental footprints.
Bill Curtin, the global head of M&A at Hogan Lovells, jokes that before the pandemic, he "lived on United Airlines," hop-scotching on quick-turnaround trips around the world.
But now, he is trying to figure out how often he and his colleagues will leave the office. He says virtual negotiations have made it possible for his team to get more deals done, and that has lowered costs considerably.
"I think the landscape has changed," he says. "It has not eviscerated the need for business travel, but it has dramatically reshaped it."
Still, nobody on Wall Street expects virtual meetings to replace business trips altogether any time soon. It's tradition, after all, and on Wall Street, change takes time.
"I think that's going to be a process that's going to take a while for people to come to grips with," Knee says.
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