Most people working in investment banking are not really investment bankers.If you really want to make money, you might try a career in compliance.
While hundreds of thousands of people work in banking worldwide, the number of people working in these niche, high-paying, prestigious banking jobs, is small. Those sought-after front office gigs where you earn millions and make calls on the direction of asset prices do not dominate the industry's hiring.
Coalition, a market research company owned by Standard & Poors, found that 53,500 people work in front office banking globally, with16,700 in origination and advisory (M&A and capital markets), 17,000 of them work in equities sales and trading and 19,800 in fixed income, currencies and commodities sales and trading.
Coalition tracks front office employment figures for the investment banking arms of Bank of America Merrill Lynch, Barclays Investment Bank, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, J.P. Morgan, Morgan Stanley, Royal Bank of Scotland and UBS. Some of these firms don't make their investment banking headcounts publicly available. However, Credit Suisse, RBS, UBS and Deutsche Bank alone said they had 71,000 people working in their combined investment banks in the first quarter.
And it's getting worse. Nearly 11,000 front office bankers have been removed in the past two years, according to Coalition. If it was hard to become an elite banker in 2011, it's harder still in 2013.
Compliance is one area where you can still make bank. Mike Cavanagh, co-CEO of JPMorgan's corporate and investment bank, told the UBS Global Financial Services Conference yesterday that compliance and control were a "top priority" for J.P. Morgan this year. HSBC, which said this morning that it may slash 21,000 more jobs before 2015, also announced it's building in compliance -- something which is possibly related to last year's money laundering scandal.
The chart below, which covers all HSBC staff and not just elite front office investment bankers, proves the point. The chart below also illustrates why compliance is now your best bet.
The comeliness of careers in compliance (at HSBC)