Six ways to build an awesome finance career until 2020
Financial services careers are like political parties: prone to the ups and downs of the global economy; liable to a few years of power followed by decades in the wilderness. In the circumstances, it may seem futile to look too far into the future and better to do the best you can while you can. But finance career coaches say this is a problem across the industry, where long hours leave no time for perspective and career strategising.
Banking is in the midst of a transformation. If you want to survive, you'll need to ride out the key trends below.
1. Avoid any process lending itself to automation
Read the writing on the wall. The future in finance is automation, and this doesn't just apply to the back office. Last week, Goldman Sachs CIO Marty Chavez, said the bank has built a flow chart breaking down the 160 steps involved in an IPO, many of which are "ripe for automation." Paul Rowaday at Tabb Group puts it more cataclysmically, claiming that a, "a super nova of willingness to implement digital-age innovations has just now washed across the entire financial services spectrum."
The most savvy young financial services professionals can see what's coming. One structured products marketer told us he preemptively quit his job to take a coding course because he was building manual presentations that could easily have been automated. “It felt more dangerous staying in finance and not learning to code than leaving and taking the course."
2. Get ahead of regulation that will impact your business - even if you're not in compliance
This year, Goldman Sachs hired a student specialised in the impact of Basel III and Dodd Frank to its analyst class. She didn't join in compliance. She didn't join in risk. She joined the securities business. There shouldn't really be any surprises here. In the words of John Gerspach, CFO of Citi, banks are experiencing, "continued headwinds" in regulation and compliance.
J.P. Morgan's banking analysts see ongoing, "regulatory risk" from changes to Basel, implementation of ring-fencing rules in the UK, changes to the way capital is assessed and reforms to the OTC derivatives market. There's also the fundamental review of the trading book and MiFID II to contend with.
3. Focus on key clients, or get out and work your niche elsewhere
Niche is out. If you work for a big bank, the next five years will be all about serving big clients as efficiently as possible. At Citi, for example, Gerspach defined the bank's key institutional client as, "a sophisticated multinational corporation, a public sector entity, a financial institution or global investor with a significant wallet for financial products and services." The bank is rationalizing its client list on this basis. J.P. Morgan is doing much the same. If you want to work with smaller clients, you'll need to move to a smaller firm.
4. Manage a near-shored team
The next few years will entail continued cost cutting. As per the chart below, Morgan Stanley analysts are predicting stagnant revenues right through to 2017. Success in finance is no longer about growth, but about efficiency.
It's no mistake, therefore, that Goldman Sachs has only hired 10.5% of the people it planned to in Manhattan 10 years' ago, or that Deutsche Bank has been locating 'low touch traders' in Birmingham. If you're based in an expensive financial centre, you'll need to justify your high salary and inflated seat cost. You can either generate huge revenues yourself, or you can interface with senior staff and help manage a team that are generating huge revenues elsewhere.
5. Stay in touch with former colleagues
With costs as the battleground and salaries higher than they've ever been, banks are increasingly averse to taking a risk on new hires - especially at VP level and above. If you want to change jobs, it therefore helps to find someone who already appreciates your capabilities. Someone you've worked with before. Christian Robbins, a headhunter at Macro Tradestone, a fixed income search boutique in London, says much of the hiring in the City in the past few months has entailed this kind of move. Murray Roos's equities hires at Citi are but one example of this.
6. Become a strategist
Finally, with 'optionality' off the table and banks no longer able to afford being all things to all clients, the next five years will be all about each bank defining exactly what it does want to be. It's no mistake, therefore, that Tidjane Thiam, CEO at Credit Suisse, just hired a top financial institutions group (FIG) banker as his 'senior advisor' before he starts restructuring the bank. Similarly, one of John McFarlane's priorities at Barclays has been hiring a 'strategy and transformation czar' to help with the process of cost-cutting - a position which may still be open if you get your application in soon....