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Once the bonus season dust settles and cash hits the bank accounts, Wall Street laces up its running shoes. Now, everyone from up-and-comers to full-fledged rockstars is racing to assess their opportunities.
Take Goldman Sachs for instance. While there’s been a steady stream of senior exits since David Solomon grabbed the throne and endeavored to shrink the bank’s partnership, in recent weeks there’s been a deluge of notable defections.
Elsewhere, firms like Bank of America and Barclays have resumed their annual headcount pruning after pandemic-related freezes, adding to the moving fracas.
At the center of it all are Wall Street headhunters, who are working feverishly to supply the bodies for new buildouts and initiatives their clients are prioritizing for 2021, as well as filling the vacancies elsewhere as stars are poached away.
We asked eight industry recruiters to take the temperature of the hiring landscape, and explain the hottest sectors and trends they’re observing right now.
Among the trends they’re seeing:
- Private credit is scorching hot after record quarters to end 2020, stoking demand for professionals at all levels and inflating compensation packages.
- Asset managers are scrambling to add ESG strategists and investment professionals.
- Private-equity firms are in a hurry to nab star capital markets dealmakers.
- Quant researchers, developers, and data scientists remain sought after, including for those looking to solve systematic credit trading or beef up volatility trading strategies.
- Others are seeing burnout, compounded by the pandemic and remote-work period.
As Wall Street gets moving this spring, here are some of the trends that will define recruiting in the months to come.
“We’ve also seen an increased demand for research scientists coming from academia.” — Ben Hodzic, executive director, head of quantitative analytics, research, and trading for Selby Jennings North America
Selby Jennings’ quantitative recruiting team is seeing heightened interest from commodities trading outfits and macro investors. More broadly, there’s a greater demand for researchers and developers focused on volatility and trade execution.
“We’ve seen an increased demand for systematic macro quant portfolio managers and research staff to help support our commodities trading advisor and macro clients as they come off of a good year and increase in asset inflows,” Hodzic told Insider. “Subsequently, we’ve seen a demand for execution talent across our large sell-side and buy-side clients looking for market impact experts to analyze different liquidity algos and also build some proprietary models in-house. Given the increase in volume and expected high volatility to come, our hedge fund and banking clients continue to hire quant researchers and developers to support these transaction models and find innovative ways to trade.”
Demand for data scientists remains robust, including those without any prior financial experience.
“We’ve also seen an increased demand for research scientists coming from academia looking to get their feet wet in finance,” Hodzic said. “These types of profiles are increasingly sought after given their innovative research methodologies, use of newer technologies, and unbiased experience as hedge funds and asset managers try to find alpha in the markets.”
Plus, data scientists come in handy at middle-market to large private-equity firms, too, Hodzic said.
“When it comes to recruiting those individuals, it is challenging — it’s not your traditional technologists that you’re looking for. It’s someone that has worked on large data sets and understands how to build data platforms and how to build the foundation for the investment teams to actually work on,” he said.
“Improving research productivity is essential.” — Todd Hicks, managing director, Atlantic Group
Hicks, who focuses on quant investment talent primarily on the buy-side, said activity has been strong thus far in 2021, as many hedge funds with diversified strategies had blowout performance last year.
“We’re seeing a continued emphasis on building more collaborative research teams at many of the large multi-strat hedge funds,” Hicks said. “There’s so much shared knowledge between competitors, firms are thinking about ‘how can we create an edge through the way we structure our research organization?’ Improving research productivity is essential.”
Meanwhile, culture has never been more important. Money always talks, but candidates increasingly put stock in the leadership and mentorship offered at a firm.
“As compensation structure and retention techniques become more normalized across the hedge fund industry, candidates are increasingly making decisions based on their perceptions of company vision, leadership, and culture,” Hicks said. “These will be the key differentiators in the competition for top talent moving forward.”
“The diversified, traditional asset management industry — the big focus, and it’s been sort of a drumbeat for some time now is in ESG investing and social impact investing.” — Paige Scott, senior partner and leader of the asset management practice, Kingsley Gate Partners
Heightened awareness of ESG imperatives is inspiring asset managers to seek out experts in social impact investing, Scott said.
“Many of the firms have, in the last 12, 18 months, gone out and most of them have internally identified leaders for those businesses, and now many are looking at how they want to build on those capabilities, which is requiring many firms to go externally to find the talent to build” and oversee those strategies, she said.
In the past, while asset managers have sought to promote from within for those roles, some of the people appointed to those positions have made it clear that they don’t have the “native experience” to spearhead those efforts themselves, Scott said.
She named hiring for ESG investment professionals, ESG strategists, and policy engagement professionals as being a hot trend permeating the space right now. Many of the people right for these roles have come from a public policy, NGO, or think tank background, she explained, and many have left those activities in favor of pursuing additional education such as a CFA designation.
These ESG investment roles enable them to connect the dots between their environmental, social, and corporate governance experiences with their interest in financial services, Scott added.
“Specialists in the areas of asset based lending, private ABS, technology, healthcare, and sponsors coverage are among the most in demand.” — Kevin Mahoney, partner & head of investment banking, private equity, and private credit practices, Bay Street Advisors
Private credit finished 2020 off at a blistering pace, which has carried over into the start of 2021, Mahoney said.
“The direct lending, opportunistic credit, and asset finance markets are all experiencing unprecedented growth, but the competition has resulted in a challenging environment for funds to make money given the scarcity of attractive deal terms and the funds’ own cost of capital,” Mahoney said.
“Many are now looking to be more flexible and creative in how they structure investments in order to stay relevant — we’re seeing a pronounced shift away from one product shops, such as BDCs that focus solely on senior debt, towards those that can invest across the capital structure. This shift also means an increase in recruiting activity as funds line up for professionals that can help adapt their strategies. Specialists in the areas of asset based lending, private ABS, technology, healthcare, and sponsors coverage are among the most in demand.”
The torrid pace of deals, as well as an influx of new entrants looking to capitalize on the market, has heightened staffing demands among private-credit investors. And whereas they previously might have poached staffers directly from the banks, they’re now looking to fill a broader set of roles, including senior hires, and the banks are also dealing with a dearth of talent.
“With the needs now ranging from senior originators with specific sector expertise or client relationships down to junior-level execution support, there simply isn’t enough available talent in the market to satisfy the need. Banks themselves are also finding themselves shorthanded in the current environment,” Mahoney said. “Throw into the mix new entrants into the private credit markets — ranging from diversified asset managers, insurance companies and private-equity firms through pension funds looking to build their own direct investment business — and you have a pronounced supply and demand imbalance for talent. ”
Given the competitive dynamics at play, compensation has shot up in tandem, he added, with some offer packages demanding multi-year guarantees with raises in excess of 40% to 50%.
“Compensation packages for new hires are beginning to reflect an overheated market.”
“Both private-equity and credit firms are building out capital markets groups.” — Anthony Keizner, managing director, Odyssey Search Partners
Keizner said that he’s observed private-equity firms stepping up hiring of ex-capital markets bankers.
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“Both private-equity and credit firms are building out capital markets groups,” Keizner said. “These are typically ex-equity capital markets or debt capital markets people who come from banks. They’re bringing them inside to their own firms to help advise on financing their deals and there are growing teams of these people.”
These sell-side veterans, Keizner said, are helpful to PE firms in advising on debt issuance or helping orchestrate IPOs for portfolio companies.
One benefit of bringing banking big-wigs onto the buy side, Keizner said, is that investment firms can put a star former investment-banking dealmaker in front of banks to enhance their negotiating prowess in, for instance, working with a bank to set the share price of a company that’s on the precipice of going public.
Matched by those former sell-side dealmakers, Keizner said, banks begin to realize: “Uh oh, I’ve got to raise my game.”
“All volatility strategies remain of interest, and the demand for strong quant researchers, developers, and data scientists continues to grow.” — Vick Tandon, head of US business development for global markets, Tardis Group
While his clients are still making both discretionary and quant strategic hires across fixed-income and equities, Tandon has seen notable interest in systematic credit, as well as commodities, mortgages, and volatility.
“Credit has been an asset class that in our mind has taken the lead as a growth area for a lot of ‘multi-strat’ and smaller funds. The majority of our clients have shown interest in building out ‘Systematic Credit,’ an area that has eluded a lot of folks as it can be very data intensive with current systems, models, and infrastructure not ready to support that level of data,” Tandon said. “Mortgages as a product has also been very lucrative for a few on the buy side that have had teams giving double-digit returns on their portfolios.”
Commodities has also seen “a bit of a resurgence with alternative energy, precious/base metals taking the lead,” Tandon said.
“Furthermore, all volatility strategies remain of interest, and the demand for strong quant researchers, developers, and data scientists continues to grow.”
“Healthcare, I would say, is a focus for everyone. You’ve seen a lot hires at the boutique advisory firms — no question around it.” — Elisabetta Bartoloni, partner and leader of the global markets practice at Heidrick & Struggles
Healthcare bankers are one of Wall Street’s most in-demand specialties right now, said Bartoloni.
“We’ve seen a lot of hires at the boutique advisory firms — no question around it. But also the bulge bracket [firms] are making sure that they keep their talent very close, because with high demand, everybody is focused on not only hiring but retaining their talent,” Bartoloni said.
Bartoloni named robust activity from the corporate side — M&A and equity capital markets — as injecting fresh momentum into the energy around recruiting for healthcare bankers.
Bartoloni also said that clients are increasingly focused on imperatives related to diversity, equity, and inclusion.
“We have been hired a lot not only to help clients find a diverse pool of talent, or expand that pool of talent, but also, through our consulting business, really help firms shaping an inclusive culture,” she said.
While D&I hiring imperatives have been a focus for recruiters and HR teams for years, the issue was once against thrust to the fore in the summer of 2020, after the death of George Floyd unleashed unrest across the country.
“It was a moment that definitely put a spotlight on the problem,” Bartoloni said. “Wall Street really made a commitment to really look at this very, very thoroughly, and wanted to make a change.”
“Lots of people are asking the right existential questions around, ‘What am I doing with my life?’” — Logan Naidu, founder and CEO, Dartmouth Partners
After a grueling year working from home, some junior bankers are feeling the pinch.
Indeed, the year has been filled with opportunities to call into meetings with MDs with a collared shirt on top and shorts and flip-flops on the bottom, but that hasn’t been enough to offset the exhaustion and demoralization that some younger bankers are feeling.
“It’s been a tough year,” said Naidu. “Lots of people are asking the right existential questions around, ‘What am I doing with my life? Is it making me happy? Is it making me healthy?’”
According to Naidu, some junior investment-banking talent, having lost out on opportunities for face time with managers and coworkers, are seriously questioning if a long-term path in investment-banking is the right fit for them.
“I guess when you’re in London or a big city and you’re in a bubble with you and your mates, your whole class is doing it. We’re all taking taxis home at 2, 3 o’clock in the morning; getting our shirts dry-cleaned and delivered to your desk — it becomes normal,” he said.
And, without the conventional camaraderie, in-office training, and the chance to build relationships with coworkers, some young bankers are contemplating a potential exit.