Wall Street bonuses for 2018 have been announced or hit the bank by now. That means it’s moving season for the industry’s bankers, traders, and portfolio managers.
Business Insider spoke with headhunters who work with the top firms and candidates in the industry to find out what’s driving hiring in 2019.
Some things haven’t changed: There remains in an insatiable appetite for quants, data scientists, and coding skills. But that doesn’t mean fundamental skills have gone out of fashion. At the end of the day, bosses still want talent with investment and business-analysis chops and a knack for developing relationships.
The general sentiment that an economic recession is lurking is coloring hiring decisions as well. Restructuring experts are getting a lot more calls, buy side and sell side alike.
Here’s what recruiters say are the hottest trends driving hiring on Wall Street in 2019.
“The buy side is in flux.” — Dave McCormack, founder and CEO of DMC Partners
From an investment-banking perspective, I expect a lot of movement. There are both cyclical and secular changes to the business — some driven by extreme regulation like MiFID, which has impacted certain regions over others — but I expect this will even out over time as real money managers start to realize that they need the sell side.
Within equities, where volatility specifically had a bumper year in 2018, I’m expecting a lot of movement. No one is necessarily adding net headcount, but there are three clear leaders, and there’s a dogfight in the middle for market share. It really is a case of the haves and have-nots, but one has to play offense in this business. Even if that means getting smaller, you have to get better — therefore we are still in this upgrade cycle. Not all of it is driven by human capital — there needs to be considerable investment in technology, but the sell side is a relationship business.
The buy side is in flux. In many respects, the long-short model is broken, and there is considerable fee pressure, but it is also a case of the haves and have-nots. The big guys are getting bigger, and those in the middle that have had poor performance or can’t scale are being blown out. The fourth quarter was tough for a lot of funds, but January numbers have been strong, so we’ll know very soon who redeems and where that money goes.
If the theme on the sell side is upgrading, the theme on the alternative buy side is diversification. We find the quant model to be quite stale, but those running good fundamental businesses will continue to diversify.
Quants “are changing every aspect of Wall Street.” — Jason Schulman, partner at Long Ridge Partners
A major hiring trend we’ve seen emerging for a while has been the demand for quantitatively oriented investment professionals, mainly data scientists. They are changing every aspect of Wall Street, from how information is stored to creating alternative ways to generate alpha. Today, being able to create algorithms to better utilize large data sets is a powerful tool that every large financial institution is looking to grow.
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Data scientists from the big tech companies have been heavily recruited to make the move to finance and are getting hefty paydays to do so. There are still a lot of unknowns for some of the firms and the specific ways they’ll use the data, but the demand has not slowed. If your résumé doesn’t include programming languages such as Python and SQL, you better start learning!
Some of the longer-tenured analysts and portfolio managers at hedge funds are concerned that the newer folks spend more time looking at credit-card data and satellite imagery than they do getting to know a company and its businesses. Hedge-fund investing today seems to be a game of resources — who has a team big enough to dig deep into fundamentals while also analyzing large data sets from various sources.
“Restructuring experts are now in demand.” — Alexis DuFresne, director and head of marketing and investor-relations search at Whitney Partners
In recent years, very rarely do we see career movement from sell side to buy side (outside of junior analysts). This is largely due to the fact that hedge funds are now a mature business, and there are candidate pools that already exist at like funds from which to hire.
What we’re noticing now is that restructuring experts are now in demand for credit and credit-oriented shops. Since these roles are less common on the buy side and therefore present a smaller candidate pool, we are noting that we are seeing these professionals being pulled from not only “competitor” firms but also from the sell side and consultancy.
Sectors like marketing and IR are seeing the least movement from sell side to buy side, as it is a buyer’s market and there are highly qualified candidates already in the seat and with a track record looking for new homes as the hedge and private sectors shake out (particularly long/short equity). Clients want marketing professionals with existing relationships whom they do not have to retrain, and they want professionals with a history of successfully raising assets (and, to dig deeper, from specific countries, regions, or investor bases).
“Companies are looking to create and build their technology.” — Jeanne Branthover, managing partner and cohead of DHR International’s New York office
How do we stay competitive? It’s through technology, so you’ve got to do what you have to do to become the best of the best and stay ahead of the curve.
In financial services, in hedge funds, in asset management, they’re recruiting out of technology companies.
A lot of tech people get turned off by financial services, but now we have seen a trend in the last two years where techies have become more interested in the financial space because companies are looking to create and build their technology and investing money internally in it.
Every techie asks me: “Is this firm committed to spending the money they need to spend to get where they need to be?”
The most important thing is that these people like to add value, they like to fix, and they like to create. So financial companies need to let them do that and invest in them.
“There is definitely caution across the Street.” — Oliver Cooke, managing director and head of Selby Jennings North America
There is definitely caution across the Street on hiring this year versus last year.
There’s a general acceptance that an economic slowdown could be on the horizon in the next 12 to 24 months. When it exactly happens, how big it is — nobody knows.
Particularly on the sell side, all hires are getting a little bit of extra scrutiny. There is a sort of caution around what everybody’s doing.
Despite that, there’s still a war for talent among those high-growth and high-demand areas, like technology and quants/data science.
Those areas will still see growth this year, and huge demand for top talent is driving up compensation, particularly at the associate-VP level. Strong candidates with a top-notch education, computer-science expertise, quant skills, and the soft skills to match are capable of getting three to five offers from the big banks and funds.
“We are expecting an active recruiting season.” — Charles Anderson, principal and US head of investment-banking practice at Heidrick & Struggles
Within US investment banking at the managing-director level, we are expecting an active recruiting season. This is not based on compensation disappointment, but based on the stated intentions from some major bulge-bracket institutions to grow headcount.
Active sectors appear to be similar to last year: technology, healthcare, consumer, and, increasingly, financial institutions.
“There’s this ongoing tug-of-war between very different worlds.” — Hugh Norton-Smith, partner and cofounder of Intersection Growth Partners
We’re witnessing an extraordinary amount of cross-pollination between Silicon Valley and Wall Street.
Growth-stage fintechs often need to diversify their leadership away from product and engineering folks. Most in-demand roles for these firms are chief risk and chief compliance officers, a good example being Coinbase’s recent hire of a CCO from Pershing.
We’re also starting to see chief human-resource officers migrate from Wall Street to Silicon Valley. These are sophisticated leaders who bring institutional polish and experience scaling global businesses.
At the same time, established financial-services firms need growth-mindset talent who bring expertise on topics like alt data, digital currencies, and machine learning.
So there’s this ongoing tug-of-war between very different worlds, which are on a collision path. Navigating the nuanced cultural differences, in particular, is vital.
“Strategy is an increasingly important area.” — Arnaud Tesson, head of Egon Zehnder’s US asset-management practice
An asset-management company used to be a pretty rudimentary business to run, with focus primarily on manufacturing and distribution. Now it has become more complex, and senior roles have changed. New needs have surfaced, while others have increased.
Strategy is an increasingly important area, starting with the head of strategy and then everything under it. Several of the large asset managers have changed their head of strategy in the last year and built up their strategy function.
Firms are also looking to strengthen product management. One thing the industry is migrating toward is thinking about their offerings in terms of product. The product manager is thinking value proposition first and is the point person who deals with the investment teams and sales to think holistically. It’s not the center of an organization like at P&G, but we’re trending in that direction over the longer term.