Mutual fund companies and other financial services firms continue to battle one another for wealth management talent even though companies are forced to pay hefty salaries that crimp profits.
An executive recruiter with Russell Reynolds, one of the premier search firms in the nation, said that while searches for mutual fund companies are flat to slightly low, firms are looking for alternative investment, private banking and wealth management executives, and especially operations staff.
Mindy Diamond, president of the search firm Diamond Consultants in Chester, N.J., said that there are plenty of job offers in the wealth management sector. For example, in December she cold-called a team of four people who were generating more than $3 million per year in revenue for their firm. They had been with their firm for many years and had no intention of changing jobs but felt abandoned by their managers, who worked in an office in another part of the country.
Diamond persuaded the investment team to consider a move that would "monetize" their business-and soon enough, they got an offer that included close to $7 million that the four could split amongst themselves, along with a wish list of other things they had never had the bargaining power to acquire, including an assistant.
"They had every major firm in town fighting over them, throwing enormous amounts of money," said Diamond, who added that she expects the team to switch jobs in the coming months.
Another recent team hiring involved Credit Suisse Group's private bank, which on June 2 announced that it had recruited the seven people led by Richard S. Zinman and Anthony A. Dertouzos from the global wealth management unit of the New York financial services giant Citigroup.
And on May 28, Wachovia Corp. in Charlotte, N.C., hired John M. Dowd and Thomas F. Scaturro from BNY Mellon Wealth Management, where Dowd had been the head and Scaturro the sales chief for the company's tri-state region.
Jane Swan, the senior client partner in the asset and wealth management practice at executive recruitment firm Korn/Ferry International, said that everyone in the financial services industry is trying to steal away top wealth management talent now.
Companies consider it easier and faster to expand their business by hiring experienced financial advisers and getting them to bring their clients with them when they join a firm, she said. However, employers should come up with other ways to drive revenue, Swan believes.
"It's an aggressive war for talent that nobody seems to be winning," Swan said. "They're paying through the nose to bring over these advisers."
Many things may motivate a potential recruit to prefer one wealth management firm over another. "If you can't compete on this is a better place for your clients to be served," no amount of money will make them want to come, said John Straus, the head of private wealth management and chairman of the private bank at UBS AG.
When Straus joined UBS about a year and a half ago, it appealed to him that private banking is one of the company's dominant business lines.
Organizations that put less focus on wealth management are likely to make decisions that give the advantage to their trading desks, he said. At UBS, Straus continued, the firm also competes for talent as a relatively "client-centric" organization.
Analysts said that UBS' recent financial setbacks have made it harder for it to retain wealth management employees. The Zurich banking company has taken hits on mortgage-related securities, and the tax advice it gave private banking clients is under investigation by U.S. authorities.
Some of the most heated talent raids are being carried out in the fledgling retirement income divisions that mutual fund and insurance companies are beginning to form to attract Baby Boomers' business and at private banks, where they are avidly seeking the mass affluent, high-net-worth, and, in some cases, the ultra-high-net-worth.
"A lot of people are focused on where there are higher pockets of higher-level wealth," said John Benevides, president of the independent adviser Family Office Exchange.
Nick Hill, an analyst at Standard & Poor's Corp. in London, said that many companies want to grow in Asia and the Middle East, where wealth is being created but that it is still tough to find people who have the necessary language, financial and people skills to be able to talk with the rich and persuade them to invest.
"That's a rare skill set," Hill said. "That's probably why they're able to command relatively high compensation arrangements."
Another reason for talent bidding to get out of hand, besides supply-demand dynamics, is that many financial institutions have given employees forms of compensation such as bonuses or stock options that make it harder to leave for a rival without losing money.
As a result, employers are paying more to buy such people out of those commitments and persuade them to switch jobs.
"The large financial institutions with the deep pockets are the ones that have the reputation for being the most willing to pay up," said M.J. Rankin, president and chief executive of Rankin Group Ltd. in Lake Geneva, Wis.
Though many businesses have proven their determination to win the battle for talent, some point out that it remains to be seen how this will affect their wealth management operations in the long term.
"Big producers are not necessarily the only key to success in the business," said Sarah Burley, at the executive search consulting firm Spencer Stuart. "The organization also needs to have a proper strategy and the right product offering to ultimately be successful."
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