This article originally appeared on businessinsider.com. To read the original article, click here.
2022 is set to be another hectic year of recruiting on Wall Street. Samantha Lee/Insider
Investment banks’ war for talent won’t be letting up in the new year.
Business has been booming on Wall Street thanks to a red-hot dealmaking market that saw more than $5 trillion worth of global M&A in 2021, a new record.
The frenzied activity contributed to a junior-banker shortage, driving up the price of poaching top talent.
And thanks to the longstanding threat from buy-side firms along with increased competition from fintechs, banks are racing to snap up enough talent to staff up deals and win new clients — often times coming up on comp and perks to sweeten an offer.
From the need for junior bankers to hot industries in demand, here are six things top Wall Street headhunters say they’ll be focused on in 2022.
Recruiting in 2022 is set to be busier than ever, but banks at the top of their game didn’t wait for the new year to begin the hunt for talent.
“Normally, investment banking slows down in the fourth quarter, but my clients are expecting a very busy Q1 and don’t want to get caught flat-footed,” Ken Mahoney, who heads up Bay Street Advisors’ investment banking, private equity, and private credit practices, told Insider.
Banks were more active at the end of 2021 compared to previous years because they wanted to get a jump on the competition, Mahoney added.
“I’m working with a client in one of the hottest areas — healthcare tech — that’s anxious and wondering why they didn’t start the process six months ago,” he said.
Wall Street’s talent market has long been hot, thanks to record-setting M&A fees and soaring deal volume. It’s contributed to junior banker burnout — which, in turn, has forced some rainmakers to do gruntwork — and kicked off a banker shuffle at many top firms.
Banks not already in on the action risk getting left behind, Mahoney said.
“You need to get people in seats sooner rather than later,” he said.
A key theme in 2021 was banks’ efforts to retain junior bankers, many of whom feel overworked and undervalued. Most firms this summer bumped comp and showered young talent with perks and bonuses, but a talent exodus has still swept Wall Street in recent months.
Staffing groups with junior bankers will continue to be a challenge in the new year, said Robin Judson, managing partner and founder of Robin Judson Partners.
“What we’ve found is that it’s exceptionally difficult to find strong candidates, especially at the more junior levels,” she told Insider.
One issue is that so many juniors already switched jobs over the summer after earning their bonuses, she said.
As a result, it’s challenging to find good candidates interested in changing jobs who haven’t already done so.
At the same time, clients haven’t let up on their demands for young talent — Judson said that there are “many more” junior roles open than there were a year ago.
In a competitive market for juniors, the firms that come out ahead will be the ones not only coming up on comp, but also investing in young peoples’ careers, she added.
“People who haven’t moved yet are going to be considering it unless they’ve gotten an exceptionally strong package and a sense that their priorities for their careers are being considered and will be put into motion by their employers,” Judson said.
Two of the industries that drove dealmaking in 2021 — healthcare and technology — will continue to be top of mind for banks’ recruiting efforts in 2022.
“Everyone has upped their game to get really good people,” Kim Freehill, a managing director and senior executive partner at FSJ Recruiters focused on the life sciences space, told Insider.
Firms wanting to invest in these industries are offering big compensation packages as well as pledging to pay out the bonuses candidates would earn if they stayed with their current firms.
Healthcare and technology bankers are a hot commodity on Wall Street thanks to the multi-billion dollar deals in the space. Thermo Fisher announced its $17.4 billion acquisition of PPD in April while Ginkgo Bioworks went public in September via a $15 billion SPAC deal with Soaring Eagle Acquisition Corp.
The activity has already led to hires at big firms like Citi, Deutsche Bank, and JPMorgan. Some smaller investment banks — such as Raymond James, JonesTrading, SVB Leerink, and Evercore — are also well-poised to get in on the action by offering higher-than-average salaries, Freehill added.
Healthcare and technology industries also offered a surprising pathway for nontraditional candidates to shine in the investment-banking world.
“You really need a PhD at the deal table to explain the science to the bankers, so we’re seeing some doctors shift to become great bankers,” Freehill added.
Moving to a private-equity firm or hedge fund has long been a viable career path for investment bankers who complete their analyst programs.
But as banks become more aggressive to retain employees, the buy side has found it harder to hire associates and vice presidents who were typically keen to make the switch, Andrew Golden, a partner at executive search firm Atlantic Group, told Insider.
“Our heaviest volume is with candidates two to 10 years out of college, that makes up the majority of our hiring activity,” Golden, who focuses mostly on hiring for private equity, asset managers, credit lending, and hedge funds, told Insider.
Golden said that he’s spending more of his time during the recruiting process counseling candidates on whether they should take a counteroffer from their current firm.
“Banks have come around and are aggressively countering,” which is starting to create an “inequitable” advantage for candidates, he said.
In some cases, banks are starting to win.
“I’ve had numerous occasions trying to recruit to a fund, and I thought I’ve had it, but banks are becoming more aggressive in trying to retain talent through counteroffers,” he said.
It’s a job-seekers market.
Mark Esposito, leader of the financial services practice at Kinglsey Gate Partners, said that many candidates are weighing multiple opportunities — which is driving up the price on offers.
“We’ll continue to see this war for talent roll into the next year, but the candidate is winning,” Esposito, who’s practice focuses mainly in asset management and fintech, told insider. “I’ve never seen a market where the candidates I’m recruiting have multiple offers.”
As a result, Esposito said he’s counseling clients to take three to four candidates to the end of the recruiting process as opposed to just one or two.
Firms that want to win talent will also have to sweeten the deal by coming up on comp, he added.
“Normally, firms would wait for bonus season to pass, but we’re now finding folks are not going to get the job done waiting and instead are buying out unvested equity and cash aggressively,” Esposito said.
Banks have long faced stiff competition from private-equity firms and hedge funds when it comes to retaining talent. But fintechs have emerged as a new threat to their headcounts.
“We’ve seen a trend in 2021 going towards fintech startups. It’s all about equity,” Jeanne Branthover, a managing partner at DHR and head of the firm’s global financial services practice, told Insider.
Candidates from firms of all sizes — including large banks — are being lured away by fintechs and the opportunity to take on a more creative and entrepreneurial role, she said.
“Fintech is hot, and it’s going to remain hot,” Branthover added.
But that talent will flow in both directions in 2022, Branthover said, adding that she’s seeing some banks have success in poaching talent away from younger tech companies.
“It’s not just going from big to little, you’re also seeing people change industries and go from tech to financial services,” she said. ‘We’re seeing much more industry crossover than we have in the past.”