In hindsight, financial services recruiters in London have mixed opinions about 2016. Some have bitter recollections of a uniformly tough year; others say things improved and that hiring picked up in the fourth quarter.
Will 2017 be any different? Now that fixed income trading revenues are unequivocably improving and a Trump government is threatening to loosen regulatory constraints for U.S. banks, will you find it easier to pick up a new job in London? We spoke to five different front office banking recruiters; this was their verdict.
1. Banks have become a lot more cautious about adding headcount
In the past, a good quarter or good two quarters, was taken as an indication to press the button on hiring. Now, recruiters say banks are far more circumspect.
“There’s a much bigger lag between improved conditions and hiring than there used to be,” says one headhunter focused on rebounding macro (FX and rates) professionals. “The underlying environment might be more positive, but the big revenue events like Trump and Brexit were one-offs and banks will wait and see how this pans out before adding new headcount.”
“The big banks take a very retrospective approach now,” agrees a headhunter who places M&A bankers at vice president (VP) and managing director (MD) level. “They’re not going to rush into anything and will wait and see who leaves after bonuses have been paid. They’ll take it from there. “
Just one of the recruiters we spoke to – Richard Hoar, director of banking and financial services at Goodman Masson, was genuinely upbeat. “I am cautiously optimistic,” he said. “It’s not boom season but we’re not struggling – people are coming to us with work rather than us having to go out and find it.”
2. Juniorization hasn't gone away
Just because we’re in a new year, banks haven’t suddenly jettisoned their need to cut costs. Accordingly, they haven’t lost their bent for replacing expensive MDs and directors with less expensive but highly able vice presidents.
“Everyone’s still looking for the perfect VP,” says the head of one fixed income search boutique in London. “If hiring picks up this year, it’s the VPs who will benefit.”
Oliver Rolfe, managing director of recruitment firm Spartan Partnership, says juniorization is also being driven by the need to refresh relationships in sales roles. “As portfolio managers in hedge funds get younger, banks need to hire at a junior level to build relationships with them.”
3. It’s about replacement rather than growth
“Last year, there were definite obstacles for hiring managers who wanted to get approval for new roles,” says the M&A headhunter. “This year, we’re expecting something similar. Banks will want to see where their gaps are after bonuses have been paid and people have left. It’s going to be about gap filling and hiring in areas where they’re weak rather than any real growth.”
4. Don't expect Brexit fireworks - this is a slow burn
Brexit looms over London finance jobs – especially now that Theresa May has clarified her intention of fully disengaging from the single market and walking away from any deal that’s not to Britain’s taste. Even so, and although HSBC and UBS are both now voicing their intentions to move staff, recruiters say Morgan Stanley CEO James Gorman is more typical of the prevailing mood.
“We like the UK, we like the rule of law in the UK. We like having our businesses there and our aspiration is to keep our businesses in the UK,” said Gorman, saying that Morgan Stanley would “wait and see” what happens, but that if Brexit compels Morgan Stanley to shift its European headquarters to Frankfurt or Dublin, then so be it.
“You’re not going to see anything dramatic on Brexit,” predicts the M&A headhunter. “It’s going to be a more gradual change – you’ll see that rather than hiring a new sector head in London, banks will hire that person in Europe, and that the new head will slowly build a team in that new city. This is going to be a longer term drip, drip, drip rather than a sudden change.”
5. Wait until 2018
Lastly, recruiters extol the virtues of patience. Revisiting the notion that banks are more cautious now than in the past, they say it will take a good year rather than a good few quarters before hiring really picks up. “If you get a good year this year and everyone understands that things are really getting better, then hiring will pick up again,” says a fixed income headhunter.
Photo credit: Dragon guarding the entrance to the City of London by Robin Hastings is licensed under CC BY 2.0.