Financial Services Hiring is Back

Posted by RJ & Makay on July 20, 2010

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Financial Services Hiring is Back

Lately, there has been a great amount of news about the upswing in hiring on the Street. While unemployment and job creation continue to remain sluggish nationwide, the financial services sector is starting to feel “bullish” about hiring again. At RJ & Makay we’re seeing cautious optimism throughout the industry regarding human capital hiring trends. We’re seeing first hand a steady increase in job orders this year, and a substantial jump in Q2 quantity over Q1.

News abounds in recent months regarding financial services hiring. Securities firms added almost 7,000 jobs in June according to BrokerHunter.com’s latest Employment Trends report. The finance and insurance industry added 15,200 new employees in June, the first increase since December. The New York State Department of Labor shows that New York just had the largest three-month increase in financial industry jobs (6,800) since 2008.

Financial Services beating other industries

While the national overall unemployment rate sits at 9.5 percent, the financial activities supersector currently has 6.9 percent unemployment. However, the finance and insurance sector boasts just 6.5 percent unemployment.

Most other industries aren’t faring nearly as well in unemployment percentages. Construction is sitting at 20.1 percent unemployment (but was at just under 25 percent in March). Manufacturing is at 9.9 percent unemployment.  Professional and Business Services at 10.3 percent while Leisure and Hospitality is at 12.3 percent. The Information industry has an 8.8 percent unemployment rate. The only supersector outperforming Financial Activities is Education and Health Services, whose unemployment rate is at just 6.2 percent.

Nationally, the number of jobs in all industries and sectors has shrunk considerably since 2008. For example, the construction industry lost 14% of its jobs, and manufacturing industry jobs decreased by 22%.  However, the financial services sector stands as a sharp contrast, having lost "only" 8.5% of jobs (totaling about 75,000) since that time.

A survey done in June by Duke University and CFO Magazine of over 1,000 chief financial officers reported that almost 60% of them did not expect to increase their employment back to pre-recession numbers until at least 2012, despite a projected 12% growth in their earnings and a 9% increase in capital spending over the next year.  In contrast, financial services is beginning to ramp up.

An Employee’s Job Market Once Again?

The increased hiring activities are all Recovery Signgood news for jobseekers in the financial services industry.  In just the last thirty days, RJ & Makay has received over 20 job orders from financial firms, most of which are a hundred thousand plus annual comp positions.

Several of the top financial services industry job boards are seeing huge jumps in job ads being posted this year, as compared to last year. “Employee power is back,” says an article on efinancialcareers.com, which also reports a 75% increase in investment banking jobs over the last year.

Constance Melrose, Managing Director of North America for eFinancialCareers told RJ & Makay, “We saw the signs early in the year – clients telling us that speed to hire had become a key issue.  If companies don’t act quickly they risk losing talent, as candidates are getting multiple offers. Salaries are rising too – so it’s getting tougher to compete for the best talent.”

Melrose continued, “And it’s not just harder to attract candidates, it’s harder to keep them.  Turnover is up, and those who endured the past year and a half are starting to leave.”

Ashley Ricks, the Public Relations Manager of FinanceJobz.com told RJ & Makay, “Contradictory to popular belief, employers are not getting their pick of top talent due to an influx of job seekers out on the street. Human Resources departments are over-burdened with sifting through unqualified resumes to forward to their hiring authorities. By the time an interview is set up, most candidates are finishing up an interview process with a competing employer.”

Ricks advises, “Employers need to better streamline their processes for hiring. The days of dragging your feet are over. Successful external recruiters in the market place are finding it critical to have direct access to a hiring authority that can make independent decisions.”

According to a report in April from the Options Group, some firms are paying 30 percent to 40 percent more than what employees expect to earn, in order to lure them away from other banks this year. Employees are demanding higher salaries and more cash up front, expecting that hiring firms will adjust their compensation practices so regulators will be satisfied.  Michael Karp, co-founder of the Options Group, said, “The war for talent has intensified.”

Wall Street

While Wall Street’s local economy is still bleak and hurting for jobs, the financial services sector is slowly becoming its shining star once more. As New York City continues to cut vital services like childcare to help balance its budget, and New York state struggles with a $9.2 billion deficit, financial services jobs are set to draw a lot of money into the city in amounts larger than the number of jobs themselves, proportionately.  The Federal Bureau of Economic Analysis says that for each job created by the financial securities sector, two additional positions are created in New York City. Twenty percent of New York State’s tax revenue comes from the financial sector. New York City had 429,000 financial jobs as of May 31, down from a peak of 473,800 in August 2007. Employment in the securities industry in New York was at 160,400 in May, down from 188,900 in January 2008.

Recent Hiring Trends

Upward Pointing ArrowBloomberg reports that the five largest banks on Wall Street – Bank of America, JP Morgan Chase, Citigroup, Goldman Sachs and Morgan Stanley increased their total headcount in Q1, which is the first three-month jump since the start of 2009.

Even the mortgage-backed securities market is making a return. According to the Financial Times, Both UBS and Nomura had pulled out of that market after experiencing losses during the financial collapse, but both are now starting to reassemble their US-based mortgage desks. They’re not the only ones. Royal Bank of Scotland and BNP Paribas have also begun hiring a considerable number of employees to their mortgage teams.

Look at some of the hiring numbers we’ve compiled from various articles and websites:

  • Goldman Sachs added 600 jobs worldwide in the first quarter of this year.
  • JP Morgan’s investment Bank hired just over 2,000 people globally since the beginning of this year.
  • New York-based Credit Suisse’s investment bank filled 600 positions in the first quarter of the year, with a large amount of the positions being in New York.
  • Deutsche Bank hired 414 people in New York since the start of the year, including 98 directors and managing directors.
  • Morgan Stanley recently hired 500 people: 100 U.S. private bankers, 100 traders and 300 people in sales, and has plans to add another 400 employees.
  • Centerview Partners, a boutique investment bank specializing in corporate advisory work, added 10 bankers to its New York headcount, boosting the staff number there to 75.
  • Nomura of Japan recently hired several top banking executives from Deutsche Bank, and its New York based securities division increased its headcount to over 1,700, up from 1,000 in March of 2009.This firm plans to add another 300 to its staff by March 2011.
  • Macquarie, an Australian-based investment bank hired six traders in New York recently, and had plans to announce the addition of six equity traders the following week
  • Citigroup has hired about 15 private bankers since March and plans to add 115 more over the next several years.
  • eFinancialCareers Ltd. Has seen a 75% increase in investment banking jobs posted on its website from a year earlier.
  • New York City had 429,000 financial jobs as of May 31, which is up from 422,200 in February, according to the Department of Labor Data.
  • The New York Times reports that New York securities firms have added almost 2,000 jobs since February, when employment had bottomed out.
  • Jeffries, in New York City, expanded its fixed-income and healthcare investment banking groups, adding about 200 people this year for those areas.
  • Results from a recent survey published by 7city Learning say Wall Street is ready to make room for recent graduates; half of the 36 large financial firms in the study said they plan to hire 20% more junior employees than a year ago.

Tepid optimism is in the air

While there are plenty of economists concerned about the possibility of a double dip, and other observers who believe this may be a short-term hiring burst, many in the financial services industry are getting bullish on human capital. The financial services industry is hiring now to replenish ranks, but also in response to the widespread anticipation of the “eventual but nearing” recovery. Ray Rosen, a regional economist at the Federal Reserve Bank of New York says the hiring on Wall Street indicates that the overall economy should be improving. “I think we’re seeing some hiring in anticipation of better times,” Rosen said. “Wall Street typically hires in anticipation of the recovery.”

While all of this is good news for our industry, many have found enthusiasm premature. Light may be visible at the end of the tunnel but so far sunglasses haven't been needed. Even though there’s a sense of growing optimism, it’s a tepid, cautious optimism. But, there’s no denying it’s there, and this alone fosters an upbeat outlook about the financial services near-term human capital status.

Articles and links of interest:

Wall St. Hiring in Anticipation of an Economic Recovery (by Nelson Schwartz, New York Times)

Growing Evidence of Wall Street Hiring Boom (by Jon Jacobs, efinancialcareers.com)

Wall Street Banks Hiring Like Crazy and Offering Killer Incentives Again (by Vince Veneziani, Businessinsider.com)

Wall Street Hiring Jumps Most Since 2008 (Jewish and World News)

New York Financial Job Machine is Revving Up Again (by Brett Philbin, Wall Street Journal)

What to make of the Wall Street Hiring Boom (by Brett Philbin, Fiercefinance.com)

Companies Have the Cash but not the Will to Hire (by Jia Lynn Yang, Washington Post)

Bank Mortgage Securities Desks in Hiring Spree (by Suzanne Kapner, Financial Times)

Wall Street Hiring (employmentspectator.com)

Should We Care that Wall Street is Hiring Again? (theAtlantic.com)

Wall Street is Hiring Like Crazy in Energy and Healthcare (by Courtney Comstock, businessinsider.com)

Pssst: Wall Street is Hiring Again (by Stephen Gandel, TIME)

Wall Street Back in Hiring Mode (by Lee Barney, mmexecutive.com)

Current Employment Statistics Survey (New York Department of Labor)

- RJ & Makay



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