GUEST COMMENT: The world outside investment banking

With so much discussion around the effect of the credit crunch and sub-prime losses on hiring volumes in investment banks, it is easy to overlook the fact that the broader financial services firms are still hiring.

Banks' accounting, operations, IT and risk professionals all possess skills which are readily transferable and increasingly in demand within the growing hedge fund, private banking and asset management sectors.

So why are these markets still prospering when investment banks are in such turmoil? The answer varies, depending upon which sector you look at.

Multi-strategy hedge funds employ a variety of investment vehicles across a range of markets - in some instances, they are continuing to grow rapidly despite the adverse market conditions. The nature of a hedge fund dictates that it may deliver positive returns regardless of the market direction. To quote one established hedge fund portfolio manager, "We like it when it's choppy."

Private banking is also flourishing. According to the Sunday Times Rich List, "The collective wealth of the 1,000 richest has jumped to 412bn, up from 99bn in 1997. Total net wealth during the same period has slightly more than doubled." Despite the recent poor performance of the economy as a whole, the global super-rich have never been richer. Private banking is witnessing a boom in demand for increasingly sophisticated wealth management services, which in turn creates opportunity for investment banking candidates.

Meanwhile, the asset management sector continues to benefit from the worldwide growth in the pension industry. People are becoming more conscientious about managing their own retirement plans, with more individuals than ever before entering both public and private pension schemes. Asset management firms are benefiting as pension funds award them bigger and bigger mandates.

What makes investment banking candidates so popular with other sectors? Investment banks have long set the standard for operational efficiency. They continually evolve their infrastructure to improve process efficiencies whilst minimising operating cost. To that end, people with banking experience are often sought after to impart this 'best practice' knowledge to smaller financial services entities.

Hedge funds, due to the volatility of their market, are now seeking candidates with experience of rigorous accounting processes providing real-time information on investment performance. Investment banking product controllers are ideally placed to provide this.

Private banks are becoming increasingly sophisticated: their product offerings are now more closely aligned to those of investment banks. As a result, they require the same sort of complex financial instrument expertise and are actively hiring investment banking candidates to provide that knowledge.

In the present market, asset managers are dealing with larger trading volumes and have adopted new regulations such as MiFID. They are therefore seeking candidates from the investment banking risk space, who have experience of dealing with the new regulations and challenges of complex trading procedures.

Hedge funds, asset management and private banks are filling the gap in hiring that the investment banks have left in recent months. In the past, banks typically presented the best all-round packages, but companies from the wider financial services community are now willing to pay the necessary salaries and benefits to ensure they continue to attract talent in this difficult market.

Mark O'Reilly is associate partner in the banking finance division of Astbury Marsden.