Still eager to restore public confidence, Wall Street investment banks will be hiring more people over the near-term who can keep them out of legal hot water or burnish their brands with the public, the new chairman of the Securities Industry Association (SIA) said Friday in a one-on-one interview.
James P. Gorman, who will become president and chief operating officer of the individual investor group at Morgan Stanley in February 2006, told eFinancialCareers.com at the trade group's 34th annual conference in Boca Raton, Fla., that there will be strong job growth in "anything involving legal compliance and public affairs - things that touch on the image'' of a financial services company.
In the face of stepped-up regulation, Gorman said, demand for compliance strategists, auditors and risk specialists still outpaces the ready supply, and these types of jobs will continue to pay well. Risk management capabilities and skills in statistical analysis also will put job candidates in the catbird seat, Gorman said. "And when I say risk management capabilities, it could be from any field. They could come out of the petroleum industry."
For example, recruiters say demand for risk experts in 2006, once this year's bonuses are paid out, should be healthy across all three main areas of the profession: credit risk, market risk and operational risk.
Hedge funds are also driving risk hiring on Wall Street. Prime brokers in investment banks who lend to hedge funds are called on more and more to analyse both the credit and market risks of doing so - to keep their clients, and themselves, out of trouble. Heads of prime brokerage risk can earn over $700,000 for the service; mid-level VPs are on $350,000, says one recruiter.
Banks in the Black, Brands in the Red
While this year is on track to become one of the strongest earnings years for Wall Street firms since the dot-com boom, Gorman says banks are still struggling to restore public trust and the integrity of their brands in the marketplace. The SIA, with 600 member securities firms, has been conducting public drives to restore that confidence in recent years. It regularly sponsors seminars and courses for bankers that address ethics and conflicts of interest issues.
But Gorman thinks there is still a lot of work to be done. He said there "still is a perception out there" that banks will pay lip service to their toughest critics but fail to change. The fact that banks will start hiring more people in watchdog and PR types of jobs is a "good sign" that real change is coming, and with change comes new opportunities for job seekers.
"The intensity of the regulatory environment over the past several years has been unprecedented in modern memory - and let's be frank: we brought it on ourselves," Gorman said. "The market excesses, the accounting scandals, questionable behavior across a wide range of industries - all have demanded, and received, a stern regulatory response."
Calling all Financial Advisors
In his address to the SIA as he assumed the group's top leadership post, Gorman listed retirement policy and the need to encourage public savings and investment as two other key issues facing the industry.
"SIA estimates that only about one-third of baby-boom households are on track to accumulate enough retirement wealth to maintain their working-age standard of living,'' he said. "The so-called 'wealth effect' - asset appreciation primarily in securities and real estate - has given people a false sense of security when it comes to their own retirement."
On the retail side, Gorman thinks financial advisory jobs are on the rise. "People think that the advisory business won't grow, but I do,'' Gorman said. "People who have counseling skills and the ability to communicate'' with clients will be in high demand.
One of the better financial advisors when he was executive vice president and president of the global private client group at Merrill Lynch, Gorman recalled, was a former priest who typified the psychological aspects of the job. "The job (of advisor) calls for people who can relate to people. Of course, they have to learn the products."