Whether they call it "aggressive recruiting" or poaching, financial services companies across the board are predicting the practice will intensify in the coming year, forcing many of them to sweeten their offers and actively seek out skilled professionals both within and outside the industry.
The trick will be accomplishing this in an environment in which regulators, the news media and the public are disapprovingly scrutinizing Wall Street's storied bonus structure.
Furthermore, every mutual fund company, brokerage firm, private bank and broker-dealer is seeking those very same scarce talents.
A survey of more than 200 outside recruiters and hiring managers at Wall Street firms found 57% saying that they expect poaching to become "more aggressive" this year, and 2% predicted "less aggressive" tactics.
Now, when a financial services company wants to roll out a new product or enter a new market, most are unwilling-or cannot afford-to invest the time to train or transfer people already on the payroll.
Instead, they seek out top performers or, as is increasingly common, top-performing teams in a particular specialty.
"What you will find is that the two industries where you have the tightest demand - technology and financial services-is where you will have the most competitive labor markets and the most poaching," said Constance Melrose, managing director of eFinancialCareers North America. The survey was done by eFinancialCareers, a network of career sites for financial services professionals. "These are highly specialized roles with a high value-add," she said, "and there simply isn't a lot of excess supply for these roles."
Melrose said her network of position- and resume-posting websites has seen a 30% to 35% rise in job openings ranging from back-office posts such as information technology to middle-office jobs for compliance officers and a flurry of front-office, customer-facing roles for which driving revenue and adding clients is the priority.
"Obviously, compensation is a key component, but it's also important to remember that on Wall Street it's not always the No. 1 thing on someone's mind," Melrose said. "Sometimes it's about the opportunity for an individual or a team to have a bigger impact," she said. "People who move need to know [that], if they leave, they're still going to have an opportunity to build out their careers."
That is probably a very good thing, especially since most Wall Street firms have, either by choice or force, dramatically scaled back bonuses in recent years.
Since reaching a peak of more than $35 billion overall in 2006, Wall Street bonuses have plummeted to about $18 billion, according to a recent report.
However, the survey said that, on Wall Street, there is comparatively little consequence for jumping ship but then returning to one's former company if things go awry at the new employer.
Twenty-five percent of hiring managers said they would allow a once-poached former employee to return, and 9% said the departed employee would be unwelcome to come back. The majority, 66%, said they would evaluate possible returns case-by-case.
More troubling to Melrose was a finding that just 41% of Wall Street institutions had assessed which of their top performers are most at risk of being recruited by a competitor.
Though 42% said they do make this type of evaluation and, presumably, act to bolster retention, the companies that have not done self-evaluations are ripe for poaching.
"I would heartily encourage this group to get more aggressive," Melrose said.
"Wall Street moves very fast. Most firms can't wait to train people," she said. "They need to get talent on board quickly, and they will do everything they can to get these specialized, proven performers."
From the labor pool's perspective, Melrose said, it is equally important that they keep up with the market, closely monitoring developments in their investing specialties to make them more attractive for potential recruitment.
"They need to understand the direction of these sectors in the overall financial services market," she said.
"They can look and compare and put their hats in the ring to get themselves known and noticed by employers," Melrose said.
Though only 43% of those surveyed said they had poached a professional from another industry to fill a gap in their organization, this will rise as the economy improves and the reservoir of financial services specialists evaporates.
Larry Barrett is a contributor to American Banker.