Follow the money. That old chestnut is taking a new geographic twist, as financial professionals spanning a wide spectrum of business segments and experience levels pack up and move across the globe to follow the trail of wealth creation.
Job creation is proceeding apace in Asia, India, the Middle East and Russia, even while Wall Street hollows out. Up-and-coming financial centers are drawing in what a trader might call the "wings" of front-office work: low-end financial modeling tasks traditionally performed by entry-level investment banking analysts, plus some quite senior roles tied to raising a global institution's local or regional profile in fast-growing markets.
As detailed in a pair of New York Times stories early this week, one facet involves outsourcing a somewhat higher level of research support functions to India. The other facet is a jump in the number of specific senior-level roles and individuals being relocated to emerging markets.
It's No Joke
When the trend began attracting notice last year, it inspired gallows humor. "It's Mumbai, Dubai, Shanghai or goodbye," went the joke on trading floors. But it wasn't long before financiers - perhaps the most nimble and adaptable people on earth - learned to embrace the new reality.
Chicago-based headhunter Linda Mack says more and more of the private wealth managers she recruits tell her they're open to an international move. "They may not be interested in relocating to another part of the U.S.," she observes. "But they will say, 'I am interested in Dubai.'"
That seems true among my own circle, as well. One former colleague, a veteran Wall Street bond trader who was teaching economics in New England when I re-established contact with him a year ago, now works in Kuwait for that nation's central bank. The other day, a laid-off financial technology executive told me he's using Rosetta Stone software to teach himself Arabic. After that, he plans to move on to Mandarin.
A Positive-Sum Game?
The job-market shift is daunting for those professionals who lack geographic mobility due to family commitments, health or other constraints. For many others, however, it presents more opportunity than threat.
Emerging markets accounted for 12 new Barclays Capital managing director promotions last year, or 15 percent of the bank's new MD class worldwide. In 2006 Barclays named just 2 MDs based in emerging markets. Of 246 newly-promoted managing directors at Morgan Stanley in 2007, 18 percent were based in Brazil, Russia, China, Hong Kong, India, South Korea, Singapore and the United Arab Emirates. Goldman Sachs awarded 17 percent of its 2007 MD promotions to people located in non-Japan Asia.
Global institutions also are transferring more top producers and managers across borders. In the first half of 2008 Morgan Stanley moved 33 managing directors to countries other than the U.S., compared with 10 such transfers in the same period of 2007. Its long-time Chief Economist Stephen Roach relocated to Hong Kong in September 2007 to become chairman of Morgan Stanley Asia. Earlier this year Lehman Brothers moved Philip Lynch from London to Dubai to head its Middle East and North Africa business. Credit Suisse recently transferred the head of its global financial institutions group from New York to Hong Kong.
Such high-power transfers signal the international destination's increased prominence and influence within a bank's overall structure. That means greater advancement potential for junior staff and mid-level managers who prove their mettle there.
Conversely, opportunities for professionals who must stay in a Western financial center will shrink at the margins. But the biggest impact may be felt at the entry levels. As ever more analyst-type work shifts to Indian outsourcing firms like Copal Partners and Pipal Research, the already remote odds of entering finance through anything but the conventional campus recruitement pipeline will all but vanish. For would-be career changers living in America or Europe, a passport and an airline ticket may become as important as an MBA and a CFA.