Bernstein analyst Inigo Fraser-Jenkins spent six months off work through illness. When he returned, he sent clients a 4,000-word note that reads like an existential crisis. It is titled "Why I do this job."

The note warns that if bankers don't create "some semblance of social utility" then they are "at risk of simply being shut down and turned into a utility by an act of fiat of politicians."

"We all spend an awful lot of time staring at spreadsheets scrolled across screens or endure wasted evenings sitting exhausted in departure lounges at random airports," he wrote. "One can do that for years of course and even though it is a cliché to say it, a profoundly personal shock is often needed to make one assess whether one on balance actually enjoys doing it."

Fraser-Jenkins concluded the finance sector is at risk of being upended via artificial intelligence and passive index investing, and that financial analysts need to make sure capital allocation is "much more useful for society at large."



LONDON — Almost everyone has taken time off work and wondered, "Why the heck am I doing this?" Do I like my job? Does it have a purpose? Even President Obama fantasized about quitting the White House to sell T-shirts on a beach in Hawaii.

With bills to pay, most of us slink back to the office and say nothing more.

But not Inigo Fraser-Jenkins, the head of global quantitative strategy and European equity strategy at Bernstein Research in London.

Fraser-Jenkins is perhaps best known for an essay he published in August 2016 titled "The Silent Road to Serfdom: Why Passive Investing Is Worse Than Marxism." It argued that active investors were trying to allocate capital most efficiently; socialist governments are at least attempting to allocate capital with some rationality through planning; but passive index funds don't even do that. Mindlessly tracking the S&P 500 could generate bubbles through vast piles of incoming cash being invested with the least amount of thought and analysis.

And then he received a cancer diagnosis.

Between then and now he took six months medical leave to deal his lymphoma, a cancer of the lymphatic system. He received chemo and radiation. "That kind of diagnosis makes you radically reconsider things," he told Business Insider. "Inevitably, when you get a big personal shock it would be odd to not have that thought."

"I've been really lucky in the scheme of things — my diagnosis was treatable," he says. He beat the cancer.

On January 8, his first full day back at work, he sent his clients a 3,921-word-long essay questioning why he does his job, the role financial services have had in creating inequality, and whether the sector has a future.

Capital allocation is worth devoting your life to

Perhaps unsurprisingly — given his previous writing — Fraser-Jenkins believes capital allocation (making sure money isn't wasted, in plain English) is worth devoting your life to.

His note begins like a cri de coeur from a man having a midlife crisis: "Coming back into the office after 6 months' absence for medical leave is a good opportunity to assess why one does one's job," he told clients.

But his conclusion is upbeat: The world of finance is going to be upended by artificial intelligence and passive index funds, so financial analysts have a lot to offer in making sure those issues don't turn into systemic threats or bubbles.

We live in 'Piketty world'

Bankers have been the beneficiaries of an increasingly unequal "Piketty world," he wrote, and this has created a political threat to their existence.

"Maybe the yearning for a social function is personal and merely the result of being older, or having been ill. But I suspect there is also a reason of more general applicability to the readers of this note. That is the finance industry has vastly expanded its share of the economy, of listed market cap and of the share of total wages paid over the last 40 years and now this appears to sit very uneasily with a zeitgeist of harder times and changed social and political reality. We find ourselves in the Piketty world where there is a realization (albeit a belated and still hotly debated one) that there has been yawning inequality growing in society."

"If the financial industry does not recognize this then it is at risk of simply being shut down and turned into a utility by an act of fiat of politicians."

Thomas Piketty was the author of "Capital in the Twenty-First Century" (2013), a towering work that suggests increasing inequality is a normal feature of capitalism, and that the postwar period of relatively widespread prosperity was a blip.

Financial analysts need to worry about ESG — environmental, social, and governance investing — he told Business Insider. There is a "rapidly growing poll of cash attracted to ESG," he says, and analysts need to "help in getting society towards funding the things it cares about."

'In this industry, we all spend an awful lot of time staring at spreadsheets scrolled across screens or endure wasted evenings sitting exhausted in departure lounges at random airports'

Much of the note is an investigation into whether finance still has some "social utility" beyond simply making finance employees rich.

"If the job cannot fulfill the goals of interesting content and some semblance of social utility — however faintly remote — then there will likely be some lingering question about it," the note says. In one section, he suggests that working for Bernstein sometimes might not be a lot of fun:

"In this industry, we all spend an awful lot of time staring at spreadsheets scrolled across screens or endure wasted evenings sitting exhausted in departure lounges at random airports. One can do that for years of course and even though it is a cliché to say it, a profoundly personal shock is often needed to make one assess whether one on balance actually enjoys doing it."

What if the robots don't want to use Excel?

Fraser-Jenkins thinks the application of AI might render obsolete the data that humans use to make decisions, especially if that data is sitting in Excel:

"At a much more practical and mundane level this transition also raises the question of what financial models need to look like. At the moment I suspect that more than 95% of analyst models for companies physically manifest themselves in Excel. In an AI and big data world do we need a larger proportion of them to exist in code instead? How are we to manage this transition, with its implications for the skill sets of individuals and accessibility of data?"

And he believes the success of passive exchange-traded funds (ETFs) will inevitably come to an end, making analyst advice for active investors more important:

"Yes, passive took market share in part because there were too many active managers hugging the benchmark in the past. But it also took market share because nearly all asset classes went up and did so with low correlation. That second support of passive is going to come to an end and I think many investors need help understanding the implications of this."

He added: "Moreover, with this change the industry will likely be much more useful for society at large and so comes back to the point we made earlier about fulfilling a role of social utility."