Financial services headhunting is a tough industry. Hiring remains muted. Competition is cutthroat. Candidates are difficult and ungrateful. We asked four different financial services headhunters what their issues are now. Speaking off the record, this is what they told us.
1. The industry is flooded with charlatans
"The real problem is that there are authentic executive search firms - like the Big Four and specialist search boutiques, and then a lot of contingency firms who are just pretending to be headhunters," said the managing partner at one London finance headhunter. "They're just punters and they give the industry a bad name," he added.
2. Candidates are ridiculously risk averse
It's become incredibly difficult to persuade financial services jobseekers to take new roles. "It's very difficult to persuade candidates that a move to a new firm makes sense," says the managing partner. "They know what they have where they are already and they have a lot of deferred stock. Most financial institutions are in a pretty bad state and people are apprehensive about moving somewhere they're unfamiliar with."
3. Banks are pretending to have hiring freezes
At this time of the year, headhunters say most banks will claim to have hiring freezes. The reality, however, can be very different. "They say there's a hiring freeze and then you see a hire announced. We're not always told the truth," says one fixed income headhunter. Macquarie, Santander and Citi are among the banks rumoured to have freezes. UBS is still said to be hiring.
A hiring freeze often amounts to one in, one out rather than no one in at all.
4. Banks are taking a long time to make hires and cancelling mandates at the last moment
"Banks are confused about who they should hire and when they should hire them," says one equities headhunter. "A bank gave us a mandate saying they were looking for x,y,z and after seeing four really strong candidates they suddenly decided not to go ahead after all. We weren't paid anything."
5. Desperate candidates won't take no for an answer
"I had one banker who'd been the head of a business on the phone for half an hour, even though I told him I couldn't help him within the first five minutes," says the equities headhunter. "He was trying to sell himself, saying I should consider him for all these roles he hadn't done before and that I knew I couldn't help him with."
6. You're competing against in-house recruiters
Most banks are trying to do more hiring in-house. External recruiters are only called in when in-house recruiters have failed. As we noted the other day, headhunters don't have much respect for in-house recruiters and would prefer to have nothing to do with them.
7. Fees are in flux
Fees for placing a candidate range from 20% to 28% of first year fixed pay, with only the inner circle of favoured headhunters receiving more than 25%. Fees have settled at this level in the past year, according to the head of another fixed income search boutique. However, some banks are keen to reduce fees further by negotiating fixed fees for hires below MD level.
It's not clear how the EU's bonus cap will impact headhunters' fees. Banks like Barclays are reportedly planning to offer some staff fixed monthly payments to help compensate for the cap. Headhunters are hopeful they'll be able to charge fees based on these payments, but this has yet to be determined.
8. Headhunters are competing against internal movers
Most banks don't want to hire externally now - they'd rather fill gaps by moving existing staff who won't add to headcount and won't result in a recruitment fee. "It can be incredibly frustrating," says the fixed income search consultant. "If there's a decent internal candidate, a client has to look at them - even if they know they can hire someone better from elsewhere."
9. It's still dead out there
"The main problem is the lack of volume. There's not a huge amount of investment and it's quite stagnant - just getting sign off for new hires is very frustrating. The internal politics are intense and you have to support your client's argument internally," says one search consultant. "The whole hiring process is less and less clear cut and you never know where you stand."